Analysis On China’s Local Government Debt Problem

China has very strict regulations on local borrowing behavior.The localgovernment shall not be casually issued debt issuance,.But in reality, many localgovernments are still in other ways such as the city voted bonds, obtained secretoperations, land finance funds for building projects. Especially after the financialcrisis in2008, the Chinese government in order to promote economic used activefiscal policy,which was the4trillion plan. Local government in debt.However, if theuse of improper and excessive debt, it will give rise to the debt crisis. Such as theEuropean debt crisis of2011.A lot of chaos and processions happened in manygovernments in the dept crisis.China Audit Department Reports show that Chinese total local governmentdebt has more than10.717491trillion yuan in2011,which may causes big financialricks that is a serious threat to our economic security and social stability. Whatevermeasures will not make up to the leak of life quality of the local residents once thecrisis broke out.Therefore, in order to deal with the issue of China’s local debt in a timely manner,we must strengthen the strict supervision of our local project construction. This paperuses a standardized method of analysis and research on a wide range of reading andcollecting a variety of local government debt since ancient times. In many ways, itcollects the full range of data on China’s local governments. And then we deal withthis problem based on the experience of other countries,and combined with China’snational conditions.This paper will learn the experience through the analysis of the U.S.Federal.Reducing local government implicit dependence on the central governmentis the only way to reduce central government’s paying. Strict administrative approvalowned and diversified funding sources is which we can learn from Japan. Supervisingthe local government through strict examination and approval, strictly regulating theexpenditures of local detail and quantifying the ease of management. We found that the main problem is the financial management system and the softbudget constraints of local debt issues by analyzing the papers. Imperfect financialregulators led to a lack of monitoring in place.The local government loans for theirown image projects.And the soft constraints of the budget have more effects onthe regulatory loopholes. So,building of China’s financial system and financialregulation, opening up the source address legacy debt issues is suggested in thispaper.At the institutional level, the allocation of the financial powers of propertyrights is unreasonable which is the main cause of the local debt problems.So therelationship between the local and central must be will functional.On the regulatoryside, strengthen the construction of hard constraint mechanism in first; strengthenstrict examination and approval, as well as the supervision of social things in thesecond; last not the least is the debt feedback with the inspection and supervision ofthe establishment of local government bankruptcy mechanism to mitigate the harm tothe country. To resolve the remaining debt problem, the local government can openup the source, try to issue local bonds and regular the specification financingplatform.