The Study On China’s Local Government Debt Issue

Although the Budget Law of the People’s Republic of China stipulates that the local government is not authorized issue local government bonds, but in recent years, local governments in order to meet our country’s economic development and the market economy, public services to meet the needs of the community of people through land finance, the city voted debt, financing and other financing platform ways produced a massive local government debt. Especially after the2008financial crisis, in order to stimulate economic development, the Ministry of Finance to take a proactive fiscal policy and the central bank to implement monetary policy in recent years, the State Council put forward the "Four Trillion" project plan, the local government can go to get support through debt funds, coupled with the impact of tax reform, making local government income over expenditure of the phenomenon is particularly prominent. For a long time, China’s local government debt management are in a state of disorder, lack of local government debt management policies and regulations, debt free and unrestrained borrowing, debt funds are not standardized, transparent and low debt, which will increase our local government debt risk, increasing financial burden, economic growth, and even social problems. Therefore, the study of China’s local government debt management problems is imminent.In this paper, the authors analyzed the current situation of China’s basic local government debt through the concept of local government debt and debt classification. Local government debt currently has the following problems:the fast growth of local government debt, high risk, lack of debt management system, debt structure imbalance, severe status of illegal debt, low transparency, which will affect the normal operation of local governments, the formation of the bubble economy, the negative impact of harm public confidence in local government, etc. I think the main reason for local government debt and debt problems are uneven fiscal revenue and expenditure, administrative system defects, and the lack of local government management mechanism. According to the main problem of local government debt, proposes prevention and control of local government debt risk policy recommendations, such as improving local government debt management system, establish a unified local government debt diversified regulatory oversight mechanism, establish a sound mechanism for local government debt solvency. Lack of debt management system for local government debt management is the most prominent problem in order to solve this problem, I suggest that the local government should regulate the reporting of local government debt borrowing, debt funds, debt funds to repay other processes, establish regulatory responsibilities debt etc.