A Research On The Mechanism For Solving Public Debt At Village-level

For a long time, the primary mass organization of self-government in Chinaundertook excessive responsibilities for supplying public goods in rural areas, whichresulted in heavy public debt at village-level, and also made it difficult to be solved.The public debt at village-level problem has been a major obstacle that constrainingthe development of rural economy; threatening rural social management; hinderingthe process of new socialist countryside construction. With the rural tax and expensesreform system going deeper, agriculture tax was totally abolished in2006in China,because of which the repay of the public debt at village-level and the supply of publicgoods in rural areas become more and more difficult. Therefore, the research on themechanism to solve public debt at village-level is very necessary not only in practicebut also in theory. It will not only promote the development of rural economy but alsoimprove the rural social management, what’s more, it will be able to perfect the publicfinance system in rural areas.In this paper，debt at village-level was divided into two parts by the theory ofpublic goods and public finance theory. One part is public debt at village-level and theother part is non-public debt at village-level. Of course，the discussion of this paperfocused on the public debt at village-level. The public debt at village-level in Jiangsuprovince and Shandong province were taken as examples in this paper. We took acombination of qualitative and quantitative research methods to study the public debtat village-level. After in-depth understanding of the status of the public debt atvillage-level, this paper focused on finding the reasons of the difficulty to solve it insystem, according which this paper made some reasonable policy recommendations.This study showed that the public debt at village level is mainly due to: first, along-term “to learn” policy in rural areas is the historical reason for the formation ofthe public debt at village-level; second, the absence of public finance in rural areasis the institutional reason for the formation of the public debt at village-level; third,the development of the third sector in rural areas lags behind the development of ruralsociety, that’s the external reason; fourth, the poor social management in rural areas isthe management reason for the formation of public debt at village-level.Based on in-depth analysis of the causes of public debt at village-level, this papergave some specific policy measures. In short term, we must define the nature of the debt at village-level scientifically, and then we must divide the debt reasonably intopublic debt at village-level and non-public debt at village-level, at the same time wemust strengthen the management in order to prevent the excessive growth of thepublic debt at village-level. In the long terms, we must continue to strength the systemconstruction, to build the long-terms mechanisms to resolve it: to create themechanism of increasing growth of government put into rural areas; to improve thepublic finance system in rural areas; to reconstruct the basic public goods supplysystem in rural areas, to perfect rural social management mechanism.