Research On The Transformation Of Local Government Financing Platform

The Local Government Finance Platform of China,which is the product of the contradiction between economic construction necessity and fund shortage,grows out of the economic transition period of our country.The tax sharing reform in 1994 led to the financial powers shift up to the central government while the administrative power was devolved to local governments.Consequently,the mismatching between financial power and administrative power as well as the unbalance of transfer payment of the central government caused fund shortage to local government;However,with the rapid development of China's urbanization and industrial construction,infrastructure construction requires a massive amount of fund,so local government undertakes a large number of infrastructure construction tasks,which leads to an even bigger financing gap.Meanwhile,the borrowing authority of local government is limited by Chinese legal system,and local government cannot guarantee for enterprises to contract loans.Under such circumstances,bypassing the limitations of laws,the local government financing platform assumes the function of financing.Naturally,the local government financing platform plays an important role in the development of urbanization and industrialization,however,in practice,the gigantic debt scale and the lack of standardization are incubating huge crises.In 2015,the new People's Republic of China Budget Law stipulated that local government is allowed to issue bonds and raise fund and the financing function of the local government financing platform should be divested.No.43 document of the State Law(2014)pointed out that the debts from local government financing platform no longer belonged to the government and local government would not be responsible for the repayment of the former debt any more.Under new circumstances,the necessity of the existence of the local government financing platform is in dispute,so this paper argues that,after the transformation,the platform can accelerate the development of economy by promoting the marketability operation and financing.First,this paper analyzes the basic situation of the local government financing platform,and combs the mutual problems of the platform.Next,the paper sums up some typical local government investment and financing models at home and abroad and then absorb the quintessence from them.At last,some transformation measures and suggestions to Chongqing Real Estate Groups are put forward by taking Chongqing Real Estate as an example,using the method of SWOT analysis,providing references for the transformation,summarizing individual problems,taking the individual and mutual problems of the financing platform as the framework,combining with the experience at home and abroad,and considering the connection among the local government financing platform itself,banks,local government and central government.