The Local Government Debt Risk Prevention Analysis In Our Country

Financial crisis which broke out in2008brought ihe world economy into recession.ail most government look measures to handle the negative inllucncc. In China.debt issue is very important.and deserving us making some analysis. In order to hedge ihe recession risk brought by Financial crisis which emerging in US. Chinese government look effective meatures to make the economy booming, that including getting huge credit from the society by China’s local government. As a result. China’s local government debt issue become trouble.and the issue has become a problem which can affeet the banking system stability.and it will become a big topic in China’s economy. In this context, the domestic scholars on government debt research began to increase, and formed a series of achievements. Results from these studies, its content mainly includes two aspects: one is on the European debt crisis, the other is the enlightenment to domestic.Based on a large number of literature reading foundation, this paper introduces the basic concept and classification of government debt in China and the basic definition of government debt. China’s government debt is divided into the debt of the central government and local government debt. In China, due to legal regulations of local government can not directly raise credit, so the local government debt scope is more extensive including the local government or its subordinate enterprises.This article introduced local government debt risk status. Local government debt risk, is refers to the risk that local government cannot pay off its due debts. According to our country scholar’s relevant research, local government debt risk in China is mainly manifested in the scale, structure. Any risk has its intrinsic formation mechanism, the economic development and economic system reform does not reach the designated position.The economic system reform and local economy high speed development require local debt scale expansion!. high speed of economic development is the objective basis of the local dcbl:2, financial system status is an important factor for the formation of local debt. tax system produces a problem leading local government fiscal difficulties:3, imperfect laws and regulations also boosted the local government debt scale:4. administrative system is the formation of local debt motivation:5, management mechanism is the reasons debt scale expansion. In addition to the above macro factors, the asymmetric information is another key factor.Since China’s current laws and regulations are not allowed local government debt to raise debt, the establishment of local goverment financing of platform company has become a common phenomenon, therefore, this article also focused on debt related to local financing platform.Because of local financing platform ’s liabilities out of the balance sheet, so the debt scale has been questioned. With the in-depth research of local government financing" platform, the huge debt rises to surface gradually.The debt risk of local government financing platforms are mainly embodied in the default risk and land fiscal sustainability risks etc.. The scale of local financing platform of debt growth momentum continues, and the debt structure is irrational. Loca! government financing platform also depend on the land from the land assignment income rise. In addition to a few highways and other cash flow source of repayment of the financing platform, land income is most local government’s important repayment source. But the regulation of land and real estate market may directly affect local financing platform servicing ability. Land financial risk and the risk of loca! financing platform to interweave together, make local fiscal risk spread to the financial system also the overall economic security.This article discussed our country local government debt risk prevention measures. It is necessary to learn from the international mature municipal bond issuance, supervision and disposal mechanism. Foreign debt management mode has the following characteristics: the level of government easy to manage. The establishment of legal supervision and management system. The development of effective and transparent financial market. China’s local government debt can absorb the beneficial aspects: reducing the government finance level; strengthen the construction of legal system; improve the bond market environment. In the short term, should strengthen the debt clearing and dynamic monitoring, prevention and control of the debt risk, about a possible debt default. In the long run. should improve system, mechanism.The innovation of this paper lies in: in the sort of Chinese local government debt, analyzes the financing platform of local government debt risk and default risk, based on strengthening local government financial, combing local government debt formation mechanism and other aspects of the risk prevention recommendations.