Analysis Of China’s Local Government Debt Risk And Countermeasures Research

According to the provisions of the Budget Law in China, local governmentsare not free to issue bonds. But in reality, the local government borrowingbehavior repeated. On the one hand, in response to the financial crisis in2008,China implemented a proactive fiscal policy and loose monetary policy tostimulate economic recovery, although a significant effect, but also led to sharpincrease in local government borrowing behavior. On the other hand, China’seconomic development mode has changed, the development of newindustrialization, new urbanization, new agricultural modernization has beenaccelerating, onstruction fund shortage, in order to alleviate the pressure ofinsufficient funds, in order to alleviate the shortage of financial pressure, localgovernment borrowing surge, resulting in massive debt, increasing rapidly, thereis a potential danger, in order to improve the status of local government debt,effectively preventing the debt risk, we must be studied.Firstly,this paper combined with the present situation of local governmentdebt, analyze problems and risks of local government debt exists at present.These problems not only make local governments can not operate effectively,reducing social investment efficiency and quality of economic growth, is apt tocause a variety of credit risk and financial risk; but also damages thegovernment credit, leading to government functions can not effectively play, andthen on China’s political, economic social development adverse consequences.Then, makes an empirical analysis on China’s local government debt risk,mainly adopts the VaR Model to measure the risk of local government debt on30areas in China,to predict whether existence debt risk of30regions in2014.Finally, learn from foreign advanced experience in risk prevention and control,and puts forward some suggestions to guard against and dissolve the localgovernment debt risk, including: improvement of relevant laws and regulationssystem, improve the fiscal and taxation system, improve the administrativemanagement system, strengthen debt supervision system, strengthen informationdisclosure system and so on.