The Risk And Countermeasure Of The Local Government Financing Platform Liability

Since2009, sovereign default happened in European countries such as Spain, Greece has always been fermenting, which causes a mass of government debt crisis and is spreading to the whole Europe. People began to pay attention to the problem of government liability default and realized that the implicit liability and contingent liability out of the budget and the official financial report is harmful. In our country, the prosperous development of local government financing platform arouse wide attention. Obviously, the risk of local government liabilities is intimately related to the macro economic policy and the structural reform. This paper tries to consummate the operation of local government financing platform and ensures the development of local economy and the stability of society by means of analyzing the risk of local government financing platform liabilities in different aspect such as jurisprudence, government budget, finance and administrative structural reform.Currently, the situation of local government financing platform liability is not optimistic. In order to limit commercial banks’credit scale, PBC frequently raises the benchmark interest rate and the deposit-reserve ratio. On the other hand, CBRC claims commercial banks to control the credit scale and imposes strict restrictions on the loans for local government financing platform, which contributes to the situation that financing cost of local government financing platform is rising, the financing scale is greatly influenced by the macro-control and the risk is gradually pooling. As most of local government financing platform liability is the contingent liability, the liability risk of local government financing platform is increasing in the situation of noncompliance management, the imperfect corporate governance structure and the insufficient guarantee of liabilities. The risk may be legal risk, financial risk, and systematic government financial risk, and it may even deteriorate to social risk.This paper analyzes the problem by the method of literature survey, comparative analysis, data analysis and so on. Firstly, I read a lot of document in order to deeply understand the development history and the research status of local government financing platform and to realize the object and the direction of my study. Secondly, I try to think of the development direction of our country’s local government financing platform by comparative analysis on foreign local government financing platform. Thirdly, by combine theory and practice, I try to ponder over different risks and countermeasure of local government financing platform liability. Fourthly, I directly analyze the fundamental situation and the potential risk of local government financing platform by using the statistical data and the analytical data published by official agencies.This paper aims to explain the generation, the development, the prosperity, the specification stages of the local government financing platform by introducing the concept, the characteristics and the operation mechanism of local government financing platform, to summary objectively the positive role of local government financing platform for social and economic development, and from the principal risk, the solvency risk and the project risk of local government financing platform, to propose that local government financing platform liability is still an important driving force of China’s urbanization infrastructure. Local government financing platform neither develops permissively nor restricts blindly. From three angles of the government, the local government financing platform and commercial banks, the standardized management and countermeasure of local government financing platform promote the safe operation of local government financing platform, which provides the sustainable development of the local economic and social.