The Study On Problems And Countermeasures Of China’s Local Government Debt

Debt financing is a common practice by the national government, It can use funds intensively to improve the efficiency of public services, it also plays an important performance in the financial functions under the conditions of market economy. It doesn’t terrible like scourge.But local government debt has become China’s main financial risks, and threatens economic security and social stability.Studying its causes, we need to jump out of the vision of finance and economics and to consider it from multiple perspectives.There has been a lot of research on local debt. Most of the points think that the root causes of local government bonds is the financial authority does not match the powers. Large-scale and low performance are the main source of debt risks.This article is proceed from two questions.If financial authority and powers matched, then the local government will be in debt or not?If the debt is unreasonable in the source, then will only from the scale and efficiency can become the standard to judge the liabilities of the pros and cons? To answer those two questions, the article first studies the background of the times by the Chinese local government bonds from the point of view of fiscal decentralization to explain why the "budget law" is strictly prohibited local governments fiscal deficits and liabilities under the provisions of it but can not avoid this reality, And then explain why local government debt has so many problems in the existing decentralized financial management system environment.Through the analysis, I think that the reason why our local government debt appear still has an important environmental background, namely the centralized financial management system and the soft budget constraint. Through the summary of problem, and conclusion that the problems of the mian rooted in the absence of the Constitution and Laws and the rights and responsibilities are unequal under the management financial classification. Thus appears the contradictions of "totalitarian" and "abuse of power". Contradictory concentrated expression is the financial opportunism and soft budget constraint.And determine if there are problems,of liability, mainly from whether its source is legitimate, reasonable and whether the use of democratic procedures, management strictly regulate, not just consider from the number of scale and economic benefits.Therefore, the solutions to those problem, this paper based on cause from problem start not only to consider the problem itself, the perfect aspect of fiscal decentralization and budget management, as well as local government bonds issued, and fundamentally to find a method to resolve these issues.Through the above analysis and understanding, it can be seen that this article is based on the establishment of a legal financial hierarchical management system, to explore the control and management of debt from a decentralized way. Strengthen the budget constraints and budget management,regulate the Government’s financial behavior and control local government debt from the legal system of fiscal decentralization.And exploiting the issuance of local bonds to ease local liabilities hidden pernicious.