A Study On Legal System Of Issuing Local Government Bond

Local government bond, which is a means of financing, is a common internationalpractice and now it has formed a set of mature theory and system in the western developedcountries.In China, there is a prohibition term of issuing local government bonds in “The BudgetArt”. With rapidly accelerating development of urbanization and intensifying of “tax-sharing”system, the contradictions that inconsistence between upward financial and disproportionatelydownward business power, are getting worse. On the one hand, there is a official prohibitionterm of issuing local government bonds, on the other, there is active demand of financing.Therefore, the hidden financial patterns represented by financial platform for localgovernment fund-raising which operates out of supervision emerge, which not only increasefinancial risk, but also result in financial crisis. The condition above mentioned comes on theheels of a intensive debate over the point whether local government should issue bonds or not.In order to deal with financial crisis and maintain an appropriate economic growth,Ministry of Finance approved to be as a deputy to issue local government bonds of2009,which is of a historic significance about bonds issuing of local government in China. In2011,Ministry of Finance approved four provinces and cities to issue local government bondsindependently, which includes Shanghai, Guangdong, Zhejiang and Shenzhen. The abovementioned two practices suggested the issuing evolution from deputy, semi-detached todetached, which indicates the point of debate over local government bond transfers rangefrom “whether or not” to “how to construct a scientific and effective system of localgovernment bond”.So on the basis of condition above mentioned, the establishment of system of localgovernment bond and definition of issuing-power of local government, are not only theimportant act to improve the system of financial management for our country, but also lay thebehavior under effective supervision through constructing overall system of issuing, whichreplace “blocking” with “soothing”, to attain the goal to regulate financial behavior forstrengthening the ability to adjust of central government.To be specific, the thesis is divided into four parts to discuss these problems.The first part is written to analyze the concept and character of local government bond,and then explain the theoretical foundation of issuing local government bond from the views of theory of public product, public expenditure and fiscal decentralization. Next, I elaboratethe necessity of issuing local government bond from the four aspects which include perfectionof “tax-sharing” reform, urban infrastructure, prevention of debt risk and construction of bondmarket, and analyze the feasibility of relevant system, in order to make a solid theoreticalfoundation.The second part is written to study on the two practices of issuing local government bondin2009and2011.I prudently arrange the issuing evolution from deputy, semi-detached todetached, and then point out the shortcomings and problems, aiming at summing upexperiences for future issuing.The third part is undertaken to study on relevant system of issuing local governmentbond in Japan, aiming at Comparison and Reference on advanced system on the basis offundamental realities for our country.The fourth part is a core part. I firstly identify an overall plan of issuing localgovernment bond, then elaborate the four issuing principles include centrally-administeredand locally-detached, law-oriented, appropriately-effectively issuing. Next, there are detaileddiscusses about the important factors of the issuing course such as subject, scale, mode,interest rate, date and so on. Lastly, In order to make sure the systematization ofissuing-system, there are supplementary analyze about unattached set systems such as CreditRating, Information Disclosure, Sinking Funds, Bond Issuance and so on.