An Analysis Of The Motive Mechanism Of Local Government Debt Growth From The Perspective Of Sustainability

Since the reform of the tax system, the re division of administrative rights and financial rights to further expand China’s local government financial revenue and expenditure gap, at the same time, the lack of perfect transfer payment system is also difficult to become the local financial adequacy, stable source of funds. In order to promote local economic development, urbanization construction, local governments need to invest a lot of money into infrastructure construction and so on, therefore, the local government can only seek to raise funds through the debt way. However, China’s "budget law" provisions, the local government shall not issue bonds itself, it had to pass the financing platform, mortgage and other ways to finance. These opaque financing mode makes the debt of local government of our country and effective monitoring and management has been difficult to obtain, and officials of the short-sighted behavior, to jointly promote China’s local government debt scale very expansion in a short period of time.From the current local government debt scale in China in terms of local government debt, already is not sustainable; at the same time, land financial dependence and financing platform debt risk also threatens the sustainability of local government debt structure. The driving force to promote the development of local government debt, in addition to China’s financial system and political system factors, including the central government, the local government’s own role. Therefore, the need from several aspects, maintain the sustainability of local government debt growth. One is to improve the reform of the tax system and transfer payment system, a reasonable value of local government revenue, the local government financial authority and powers to match; the two is the mechanism optimization of cadre assessment and appointment, and strengthen the behavior constraints of local governments and officials; three is the establishment of mechanism of supervision, avoid debt and debt caused by unreasonable waste of money, which led to the expansion of debts; four is to improve the "budget law", provides the legal basis for local government bonds.