Research On The Risk Management Of Local Government Debt In China

Local government debt has a positive role in promoting economic growth, increasing infrastructure supply, but in recent years with a surge in the amount of local government debt, local government debt risk emerged. Prevent local government debt risk is essential for the healthy development of China’s economic. The purpose of this study is to build a macro-dynamic risk management framework for local government, and put it into the analysis of China’s local government debt. Then with the practical value of the framework, it can provide recommendations for the management of local government debt risk.Our government pay more attention to risk prevention of local government debt, but there is lack of scientific way to analysis the risk of local government debt. Risk management is still focused on static narrow diameter analysis, lacking the dynamic analytical framework. Based on thorough analysis, build macro dynamic risk management framework, and apply to China’s local government debt management.Firstly, this paper determine the connotation of local government debt and local government debt risk management after combing the basic concepts of local government debt and analyze the meaning of local government debt and local government debt risk management respectively from different point of view. On this basis, this paper introduced the development process of China’s local government debt risks, both in the size and structure and pointed out that there are problems on our local government debt risk management theory, institutional settings and management measures.Secondly, the content focuses on constructing macroscopic dynamic debt risk management framework, including the purpose of the framework, the part of the framework, the logical framework of ideas and the selection of indicators. combined with China’s specific national conditions and local government debt management purposes, this paper select appropriate indicators and macro forecasting methods, complete the build macro dynamic risk management framework.Finally, take Guangdong Province as an example to apply macro-dynamic risk management framework, according to the requirements of the risk management framework. Based on the status of the Guangdong Provincial Government debt analysis, this paper forecast the debt risk in Guangdong Province in the coming years with the prediction of certain indicators offered by macro-dynamic framework. According to the analysis of the previous chapters, we proposed to establish a risk management framework in three aspects which are debt market construction, management system and the establishment of risk management framework.