Research On The Sustainability Of China's Local Government Debt

In recent years,the global financial storm become to the debt crisis in many countries.Greece,Ireland,Italy,Spain and other countries have a debt crisis,as the world's first economic power the United States not only in the debt ceiling,many local governments also face the threat of a debt crisis.The government debt become a hot topic of sustained attention in the community.Our country is at a stage of rapid socio-economic development and advancement of urbanization,the increasing demands for the infrastructure and public services,the expansion of the scale of local government investment,which have increasingly dash forward show the importance of local government debt financing.In December 2013,according to announcement no.32 released by the national audit office,the local government debt totaled 17.890866 trillion yuan by the end of June 2013,and added more than 7 trillion yuan compared with the end of 2010,the average annual growth rate as high as 22.75%.With the continued expansion of local government debt scale,the debt risk has been increasingly revealed.In present situation of local government debt financing is more and more become the important way of regional development,the issue of sustainability of local government debt is paid more and more attention.In this context,discussing the sustainability of China's local government debt will be very importantly theoretical and practical significance.Firstly,this paper analyzes the necessity of the sustainability of China's local government debt and ideas through reviewing the domestic and foreign research on the problem of local government debt and the basic theory of previous mature.Secondly,we systematically study the present situation of China's local government debt from scale,structure and orientation,so that people have a more intuitive feeling on the general situation of China's local government debt.Thirdly,we analyze the causes of China's local government debt,and explore the formation mechanism of China's local government debt from the source.Finally,basing on the previous theory of government debt and the present situation of China's local government debt,we use the mathematical model to empirically analysis the sustainability of China's local government debt.Through the theoretical and empirical analysis,we draw the conclusions:to determine whether the local government debt is sustainable,does not depend on the size of the debt,but depends on the cost of debt and the income of the debt;on the whole,China's local government debt is sustainable,but there are regional structural imbalances,the less developed western region is obvious.Based on the above findings,in order to ensure the sustainability of local government debt in general,and realize its sustainability in the history of regional structure,we put forward the corresponding policy suggestions:innovating the government investment and financing mechanism to reduce the pressure on local government debt;strengthening local government debt management and supervision to improve the efficiency in the use of debt;accelerating the transformation of government functions,and establishing a scientific cadre performance evaluation system to correct the local government of the debt financing behavior;deepening the reform of the financial system,and improving the system of transfer payments to promote the sustainability of local government debt on the regional structure;in addition,considering improving the legal environment and market mechanism.