Issuing Local Bonds - Solving China 's Local Debt

China’s fiscal decentralization reform has a significant change in the governance of government, making the central depend more and more on the local government in the provision of public services and the development of the economic role. Although the "budget law" of the people’s Republic of China shall be lack of debt, the needs of local economic development and local financial resources to actually encourage local government borrowing behavior.Especially since the2008financial crisis, the Chinese government to "increase security, maintaining stability", launched the$4two-year project investment plans, local fiscal expenditure growth rate far exceeds the rate of income growth, the economic operation of the lack of financial support. While the current transfer payment system, financial transfer payments, financial resources can not meet the needs of local funds, the local government can only rely on debt to ease the financial pressure, the increase in government debt. While local governments lack of direct financing channels for legal, only through a variety of informal channels directly or indirectly to borrow external debt, illegal financing. It has greatly increased the local government debt risk concealment, debt risk is difficult to control and prevention.As a member of the coastal city of H city finance system in China, discusses the causes of local debt risk basis, and in-depth analysis of the status of local government debt, the city of H, combined with the successful practice both at home and abroad, the research method of theory analysis and experience, combining empirical analysis and normative analysis the development of our country, to establish the system of local government bonds, to research the problem of issuing local bonds financing. On the basis of international advanced countries financial experience and our local debt development situation, problem discussion of the issue of local government bonds in China, the necessity and feasibility of local bond system design as well as the issue of local government bonds to handle the relevant supporting measures.