Local Government Debt Risk Management Research In China

The local government debt has been surging in rent years in China, leading to the accumulating risk and a lot of social concerns. Interaction between industrialization and urbanization is essential for the sound economic and social development in a region, which raises high demand for abundant funding. It is a major issue to find out the proper way of controlling the local government debt risk and minimizing the adverse effects of raising debts, so as to ensure the fiscal soundness on the one hand, while not impeding the development of urban infrastructure and putting off the process of urbanization on the other.A lot of research has been done in the area of government debt risk, formulating various series of theories. However, there are still two key issues not being well elaborated. Firstly, although a lot of literature touching upon the appraising system of fiscal debt risk and early warning mechanism, few are focusing on the fiscal risk on the local government level. To date, there is still no widely-accepted and applicable system to assess the local government debt risk. Secondly, it is still quite difficult to determine the proper scale of local government debt issuance, not only in terms of theoretical analysis, but also the realistic options.To provide a pragmatic solution, the thesis analyzes the status of local government debt and the causes leading to it. With Ningbo City as a case study, the risk assessment of local government debt is explored using the combination of both qualitative and quantitative methodologies. A method of estimating the proper scale of local government debt is developed in the thesis, which has theoretical and practical significance.