The Debt Of The Local Government Financing Platform Company And Its Risk Mitigation

In recent years, Local government debt has become China’s long-term economic impactthe stable growth of the important factors should not be ignored. In previous studies, ourattention that more local government direct debt, pay less attention to the financing platformcompany and its debt risks. This is because they have private law legal form of organization,basically free from or very little supervision and control by public authorities and legal, is atypical "fled to the private law” of the case. The local government financing platformcompany with local construction for the purpose, often for finance guarantee, relying onfinancial institutions from loans, through the establishment of the Government-owned Cityinvestment company or similar companies platform to operate. As a product of the variousaspects of institutional change in China’s urbanization and modernization process, localgovernment financing platform during the economic crisis effectively stimulate domesticdemand played an important role for our country to respond effectively to the financial crisis.But its rapid development has also created some problems to be solved.This article from thenature of the company and Government described the particularity of the financing platformcompany itself, on this basis, further analysis of the special nature of the company’s debts,which lay a theoretical foundation to resolve the existing debt risk of the corporation.The paper is divided into four parts, for a total of twenty three thousand words. The mainpart covers:The first part, the legal status of local government financing platform. First, wedefine the concept of local government financing platform, and the classification of it at thisstage, and elaborate on this basis, the production, development and current status of thefinancing platform for the company. Then describe the particularity of local governmentfinancing platform. First, from the nature of company and the Government elaborate thecharacteristics of local government financing platform for both private law property andpublic property, typical of the complete public tasks with private law. That private laworganizations undertake and complete the public investment and public construction whichshould be the Government’s commitment to undertakings. Thus, propose to the regulation ofsuch companies.The second part, explore the nature of debt of local government financing platform. Thissection investigate the specificity of the debt of financing platform on the basis of the firstpart of the financing platform for the company itself the dual attributes dual attributes. First, from the definition of corporate debt and government debt, put forward the particularity of thedebt financing platform that it is both different from the purely private debt, but also differentfrom the pure government debt,,its debt has a dual nature, so as to provide guidance on amethodology to resolve debt financing platform below.The third part, the debt of local government financing platform company to resolve. Inresolving the section, I recommend to start from these two aspects, first of all concentrate onthe debt of financing platform to classify and to different management. Second, the debt offinancing platform is settled in accordance with the two sides of the debt. The first stage, inaccordance with the private debt to repay, and strengthen the position of the mainresponsibilities of the financing platform companies. The second stage, the debt which can notbe repay, distinguish the program and purpose of the formation of the debt to the introductionof the conversion process, the public welfare of the debt of financing platform intogovernment debt which should be impact by the program of government debt to fulfill andbudget decisions. Then write the performance of government debt and the sources of fundingof government debt to fulfill.