Chinese Situation Of Local Government Debt And Risk Control

In 2008 November Chinese government launched 4 trillion economic stimulus plan, the issue of local government debt risks gradually from behind the scenes to the front. If you go back words, seed facts of the local debt risk is in the reform of tax distribution system in 1994 when planted. Government debt has been the economic scholars and public administration scholars study years inexhaustible material in the final analysis, it is a kind of government and market resource allocation problems. Social operation requires the market to provide private goods, also need the government to provide public goods, about two is appropriate proportion between inquiry and debate can be said to be the eternal theme of economics. The government provides the ability and the pursuit of scale is largely a push up government debt scale of public goods, eventually evolved into the debt risk control. We can’t deny the fact that the local government debt contribution to China’s infrastructure construction, also cannot deny that risk has been conceived in the. We want to find the crux of the problem, try to effectively balance function and risk of local government debt.From our present situation, the overall debt default risk is very small, the risk in the general control. But the debt management system in chaos and rigid, the cumulative degree of local debt risk is very rapid, risk control is relatively weak, the future trend is not optimistic. The direct cause is a new round of active fiscal policies, but the most fundamental reason is the budget management process exists many problems. We must be in the legal system and market on the basis of, clearly define governments at all levels especially in power boundary in social and economic operation of the local government, the local duty bound in a limited range, not to bear the heavy expenditure of local financial pressure, and even the borrowing and repayment pressure; we must also learn from other countries is the western developed countries where debt management experience, learn the advanced idea of system and control method; from a variety of angles, especially the enhancement of the local debt whole process supervision from the aspects of budget preparation, approval, implementation and supervision, in order to bring the local debt risk control to the appropriate extent.