The Assessment And Prevention Of The Debt Risk Of Local Government Financing Platform In China

Since the establishment of local financing platforms and the rise the local government to effectively address the process of urbanization, infrastructure, public services and other resources funding gap of rapid development. Especially after the 2008 global financial crisis, the Chinese government introduced macroeconomic growth to revive four trillion economic stimulus policies at all levels of local government financing platform is provided by a large number of policies with a lot of debt to fund local government. But behind the rapid expansion of the size of the debt of local government financing platform hidden debt risks can not be ignored.Thus, this article will of local government financing platform debt risk as the object of study in order to provide reference for an effective response and preparedness of local government financing platform debt risk. Specifically, in the course of this paper, after China’s local government debt risk financing platform for the emergence and development were reviewed its debt risk scale, structure, type and incentives in depth. On the basis of a comprehensive analysis of debt risk and clarify the status of the above, to our huge debt of local government financing platform behind the current situation of risk analysis, particularly focused on the important role of local financing platform in our land exposure in debt, and further pointed out that the existing debt problems in exposures and risks. After,we choose Yancheng, Jiangsu financing platform, using CreditMetrics model to measure and analyze the risk of its debt, further pointed out that China’s local government debt risk financing platform conduction mechanisms and economic consequences caused. Finally, based on the aforementioned studies, this paper judgment and analysis of the risk profile of the debt of local government financing platform, combined with empirical results presented can effectively manage and control the preventive measures of local government financing platform debt risk.The basic conclusion of this paper is:The scale of China’s local government debt risk financing platform for large, multi-level financing platform focused on cities and counties, and distributed in the eastern region; been rapidly growing need for macroeconomic, local government officials the simple pursuit of GDP indicators and evaluation mechanisms for promotion and financing platform for the lack of standardization of internal operational management system is the main cause of cause of local financing platform for large-scale debt risk agglomeration; while the main ways of local government financing platform for the project debt exposures own income, Government financial support and credit guarantees, land mortgage, which is dependent on the land premium means all levels of local government financing platform debt principal and interest, but which also appear over-reliance on local financial debt settlement, project management is not standardized; through further Empirical studies have found that the size of China’s local government debt risk financing platform showed an increasing trend, but overall still manageable range. Therefore, local governments in China should strengthen management of local financing platform specifications, reasonable debt clear mechanism to extract part of the fiscal year revenue and land premium as debt risk capital, and promote local government administration, public welfare project finance market.