Research On Intrinsic Relationship Between Fiscal Decentralization And Local Government Debt Risk

<Budget Law of the People's Republic of China> has been revised a few months ago, the central government grants local government the right to issue their bonds.This fact increases people's concern about the reasons of local government's debt and its risk after their behavior impulse.Now there is a mainstream view in the academic world, the current state of fiscal decentralization,which means fiscal power is held by central government and public expenditure responsibilities are transfered to local government relatively, is the cause of subordinate government's fiscal stress. There fore,if we want to get rid of this dilemma, we should expand the degree of fiscal decentralization. Based on this background, the author establishs a logic of"fiscal decentralization-local government debt-debt risk of local government"for this paper. In the specific course of study, the author solves four questions:firstly, the relationship between fiscal decentralization, local government debt and its risk;secondly,the meaning of "Chinese fiscal decentralization", and the present situation of local government debt,and the severity of debt risk due to the local government debt; and then, the difference between some special situations rooted in the alienation of China and some western countries;the last one, the practice of "Chinese fiscal decentralization" and local government debt risk accords with the expection or not in the empirical analysis.Finally,the author thinks the implementation of fiscal decentralization is unable to realize the local fiscal autonomy from the fiscal decentralization theory itself. Since the local fiscal gap exists,the local government has to depend on the vertical transfer of the central payment and borrowing horizontal capitals.It will hidden some danger of the local government debt risk.And some factors mentioned above contribute the internal relation between "Chinese fiscal decentralization" and local government debt risk from theory to the reality. Consequently, the author does not deny that fiscal decentralization is indeed,but under the current conditions,simply continuing to expand the degree of fiscal decentralization is unable to solve the problem of local government debt risk.In the end, the author puts forward some corresponding policy recommendations. As for the fiscal decentralization, in the reform of it in the future, we should not be eager to promote the degree of fiscal decentralization. What we should do is to adjust and optimize the structure of it. And in term of the risk of local government debt,we should have a thorough investigation of the quantity of local government debt in the short term.In the long term, we can establish an effective and all-round supervision mechanism.