National Credit Government Under Controlled Conditions To Maintain Liquidity Platform Company Countermeasures

After the Subprime Crisis, many countries all adopted policies to stimulateeconomics to get out the impact of economic crisis as soon as possible. Since the crisis,the overseas market demand sharp declined and it was difficult to rise. Chinesegovernment decided to perform the four trillion plan to represent the governmentinvestment, which was accompanied with a huge sum of liquidity.As the platform of the government investment, various investment companiesplay leading roles in the infrastructure, city construction, industrious constructionand so on in the global financial crisis triggered by Subprime Crisis. Since1998, as thescale and quantity development of government investment platform, the nationalizedgovernment investment and financing platform received affirmation and encourage. Ineager2009, People’s Bank of China and China Banking Regulatory Commissionpublished The Guiding Advices of Enhancing the Credit Structure Adjustment toPromote Stably Fast Development of National Economy, and it advised that“encourage the qualified local government to construct the investment and financingplatform, to issue corporate bonds, medium term note and so on, so that to broaden thefinancing channels of the investment project by the central government.Since the second half of2009, although the economy kept sustained and stablegrowth, the pressure of inflation was bigger and bigger. Therefore, the governmentbegan to sound the real risk of the rapid expansion of credit. Because the localgovernment investment platform received the relatively big share of the newlyincreased credit, they became the principle targets of audition. In the same time, as themajor capital source, the credit of banks was strictly controlled. However, lots ofproject under construction and newly started project faced the objective capital gap.This situation droved the platform to take the liquidity of investment and financing intoconsideration.Because Chinese scholars did lots of research in ordinary corporate, but paid littleattention to the government investment platform, it was difficult to find the relateddocuments. In this article, I did a deep discussion of the financing channels of the domestic government investment platform, which related to liquidity. I have read a lotof related documents and did a systematic conclusion of the domestic and foreigncorporate financing structures, and I also took examples by the domestic and foreignscholars’ methods and tools, and integrated the very national conditions of China toreach my research goals.After profoundly analysis of the financial affairs of the local investment corporateXXX, this article pointed out that although the asset size and debt size of it keepingexpansion in recent year, the asset structure and debt structure of it keeping stable, andlong term capital covers long term debt well so that XXX has sufficient debt payingability but still need to face the trouble of liquidity. In the second place, through thecomparison of debt financing and equity financing, on one hand, affirmed the hugecontribution to the local instruction by the investment corporate and the endeavor tofind the solution of intensive liquidity so that the corporate can keep financing. On theother hand, this article pointed out that in order to keep appropriate liquidity, it shouldadjust the financing pattern and structure, as well as make full use of its role asinformation medium. In the final, this article discussed that the investment corporatecould found the exit mechanism so that they were able to express their role ofgovernment investment platform and solve the intensive liquidity to some extent. Thisidea was derived from the process of searching for the financing channels and methodsbased on the liquidity demand of the investment corporate.