Local Government In China The Issue Of Special Bond Pricing And The Study Of Accounting Problems

Five years ago China first allowed local governments to issue bonds, which relieved financial stress and boosted financing sources at the local level.However, an incomplete legal system with low efficiency in regulation, complicated by unbalanced term structure, and low or inappropriate interest rates, has become the bottleneck for the local bond market.This paper reviews the existing literatures on government bond from home and abroad, and explores relevant definitions and theoretical basis so as to analyze features and influencing factors of local government debt. The focus is on the gaps in local law, inefficiencies in supervision and unbalanced term ratios, with the purpose to explore such problems as ignored risks, absence of liquidity premium and administrative intervention, and to pinpoint the factors that influence issuing and pricing of such bonds.Previous studies found that Shandong Province has seen constant improvements in its bond-related work under a unified national framework. The followings are needed for better financing using government bonds in Shandong Province: improvements in the local legal system; appropriate offering periods, greater share for long-term bonds; liberalized interest rates, better risk assessment and control, and a pricing mechanism based on market.