China’s Local Government Debt Research

In recent years, the China’s local government debt problem has caused the world’s attention. Generally, there is no authority for local governments to borrow money from market in China. However, the large scale of local government debt has become a fact that is not able to be denied. Moreover, in order to avoid the regulations, local governments has taken other measures to borrow money. According to the report from China’s National Audit Office, due to30th in June,2013, the size of China’s local government debt has reached17.09trillion, which has increased22.31%averagely every year from the year of2010.And since the lag of building local government debt management system, the risk of China’s local government debt has appeared. For example, the debt has sink into the government level of cities and counties; the main source of debt is the loan of banks, which is easy to incur the financial risk. And some of the local governments’debt size has exceeded in international warning line.Therefore, China’s local government debt is likely to be a sword, which is hanging on every head of Chinese people. Some of international institutions recognized that, after the European debt crisis and America’s sovereign debt crisis, the problem in China is the next round of economic crisis point. So it is significant to research the situation, causes, influence and solutions of local government in China, which is advantageous for China to control the debt risk, and maintain the run of economy stably.The article is mean to research the situation, causes and influence of China’s local government debt, as well as, based on the contrast of other countries’ management system and problems, to put forward suggestions to control the risk of debt, and build a suitable local government debt system.There are two aspect of weakness in the article. First, because the research of local government debt has risen in recent years, there is no comprehensive theory system to be built, so the theory analysis part of the article is not enough. Second, since the local government debt data in china cannot be collected easily, the data in the article is not enough.As to the innovation of article, an innovation perspective on the underlying causes of local government debt problems, and the operating mechanism behind management system according to a comparative analysis framework. And a new perspective on China’s local government debt management proposed suggestions.There are6chapters in the article, the2-6chapters are the main part. It can be analyzed specifically:In the chapter1, the article introduced the background and meaning of the research, as well as the framework, method, weakness and innovation in the article. And in this chapter, the literature review has been made.In the chapter2, the article analyzed the theory of the research problem, as well as, defined the core definitions in the article.In the chapter3, the article analyzed the size and trend of China’s local government debt, and using the empirical analysis method to analyze the cause of the problem.In the chapter4, the article analyzed the two side of local government debt in china. Therefore, it should be objective to recognize the local government debt problem.In the chapter5, the article compared three main model of local government debt management system in foreign developed countries, and analyzed the difficulty of the countries, to give China the revelation.In the chapter6, the article gives suggestions on how to decrease the risk of China’s local government debt problem, and establish the China’s local government debt management system.