Reseach On Local Government Debt Risk In View Of Public Finance

Since the beginning of2007economic crisis sweeping the globe and eventually evolved into theEuropean and American sovereign debt crisis, debt crisis once again leap onto the stage, and cause theattention of all over the world. China, which is the critical period of transition didn’t survive in this crisis.Under the internal and external forces, our country government decisive launched to expand domesticdemand “four trillion” investment plan for stable economic growth. The plan does contribute to the steadygrowth of economy in our country, however, there is a high fiscal deficit and huge local government debtburden. Under the influence of outside European and American sovereign debt crisis, we had to stand in thebig background of economic globalization to re-examine the existing debt problems in China’s interior, andto re-examine the conflict between the government and the market under the market economy.Our country’s local government debt risk has been formed. In the process of borrowing,randomness, non standardized, non institutional constraints, less regulation lead to the existing debt fromrevenue to expenditure is not standard, deviating from the construction of public finance target.Government debt is born from making up the deficit, the income and expenditure of the debt is alsoconnected with the local financial revenue and expenditure, so that, the local debt problem, therefore, is afinancial problem is not too much. With out the provision of the relevant laws and regulations, nobankruptcy mechanism, no specific supervision organs, no opening government information and enoughtransparent, unclear responsibility between the all level of governments, once the local governmentunable to pay the high levels of debt, there must be a higher level or the central government to reveal all thedetails, the debt risk spreads to the financial risk conduction, step by step, to the superior conduction, localgovernment debt becomes to a central fiscal pressure, threats to social stable and the healthy operation of the economy.So, study the Chinese local government debt from the perspective of public finance has greatsignificance. Not only can provide the necessary theoretical basis for the improvement of our publicfinance system; also can control and prevent the local government debt risk, keep and solve the localgovernment debt risk dissolve in the basic unit government, to avoid the transmission become the burden ofthe central government. By redefining the relationship between the government and the market, give fullplay to the role of government in the public construction area, expanding the market autonomy, improve themarket economic construction in our country.This article attempts to study the path of solving the local government debt risk from the financialsystem construction aspect. First of all, analyzes the current existing debt risk has the characteristics oflarge scale, high repayment pressure, characteristics of borrowing diversification and funding sources,complex debt risk structure, no perfect transparency debt risk management system, high debt growth speedand difficult to regulation; The debt risk formation reasons of the public finance system include unclearboundaries between government and market, the government exists dislocation, absence of offside, thecentral and local financial governance finance does not match the local government finances, the currenttransfer payment system is not perfect and the democratization of finance do not have a high level of legalsystem. Emphasis on the relationship between the local government debt risk and financial risk and itsinfluence to the financial security, conclude that the local government debt is in fact a financial risk, debtrisk to fiscal risk conduction, and along the grass-roots governments to the central government to thegovernment at a higher level of transmission route became the central fiscal risks; Secondly, explore thepractice of our country to solve the local government debt risk from finance reform. It mainly includesthree aspects, first of all, this paper introduces the various regulations and related documents published by China’s government to guard against and defuse the debt risk, local governments have set up risk earlywarning mechanism and the debt redemption reserve system to prevent the local government debts risk.Secondly, Use Guangdong province as an example to analyze the current local government adopted thedebt risk measures including improving the legal system, reform local tax system, strengthen the provincialfinancial resources, reduce the financial level, carry on the performance evaluation of the pilot reform,strict control of the new debt; Thirdly, analyzes the achievements of the local government to own bondspilot construction, explore the feasibility of local governments bonds; and then, compare debt managementmechanism with both the United States and Japan. Through the analysis of the US-Japan debt managementexperience to draw what worth our using for reference of experience; Finally, put forward to resolve thedebt risk from the financial system, which are clearing the relationship between the government and themarket, transforming government function, deeply reforming the fiscal system, to expand local governmentfinancial resources by improving the transfer payment system and local investment and financing systemand promote the reform of tax system, and improve the relevant legal system construction and supervisionmechanism, and establish our own credit rating agencies to solve the local government debt risk and keepthe local economy operating healthy and stable.