The Impact Of Local Government Debt On Regional Economic Growth Under The Background Of New-type Urbanization

Since the reform and opening up,China's economy has developed rapidly,and the GDP keeps rising,but local government debt also accumulates rapidly.Especially,the reform of the tax sharing system implemented in 1994 made the local government's power and financial rights not match,and the local government had to borrow heavily in order to promote the development of local economy.In 1998,the Asian financial crisis broke out,and the Chinese government adopted an active fiscal policy to mitigate the adverse effects of the financial crisis.Since then,the Chinese government has implemented a proactive fiscal policy until 2004,which further expanded the scale of the local government debt.The outbreak of the world economic crisis in 2008 led to another round of proactive fiscal policies and investment stimulus plans in China,which resulted in a sharp increase in the total amount of local government debt.After 2010,China's economic growth slowed down and the economic structure was out of balance.In order to maintain the growth of economy,the new-type urbanization began to be carried out in 2013,expected to be a new growth point of China's economy.But,the implementation of new-type urbanization has further exacerbated the accumulation of local government debt.Based on this background,this paper studies the impact of local government debt on regional economic growth under the background of new-type urbanization.On the one hand,to clear the status of local government debt;on the other hand,to analyze the impact of local government debt on regional economic growth under the background of new-type urbanization from the aspects of theory and empirical.Based on the relevant data published by the National Audit Office,the paper calculates and analyzes the local government debt data of 30 provinces and cities in the past ten years.Found that in recent years,the province's local government debt growth showed an upward trend,the total amount of local government debt is very large,more than 80% of the region's local government debt accounted for more than 24% of GDP.The local government debt of four regions are very different,the total debt of eastern region is much higher than the other three regions,and the western region is the lowest.But in terms of the proportion of local government debt to GDP,the proportion of the western region is the highest,followed by the northeast,central and Eastern regions.Comparing the situation of local government debt before and after the implementation of the new-type urbanization,it was found that after the implementation of the new-type urbanization,local government debt growth accelerated significantly,but the proportion of regional government debt has declined.At the aspect of theoretical analysis,the paper analyzes the impact of local government debt on regional economic growth from the short term and long term.Then,the new-type urbanization will be used as a policy shock to analyze the change of the impact.The result shows that local government debt can promote regional economic growth in the short term,in the long term,the influence of local government debt on regional economic growth is promoted first and then suppressed,like a "inverted U".Although the implementation of the new-type urbanization will increase the ratio of the local government debt to the capital stock,it will increase the steady growth rate of the economy.In the empirical analysis,the paper uses the panel data of 30 provinces and cities from 2006 to 2015,and use SYS-GMM to conduct the regression in Stata 13.From the national perspective,the result shows that the local government debt has a significant inhibitory effect on regional economic growth,the new-type urbanization promotes regional economic growth too,and fiscal expenditure,fixed assets investment and the degree of openness also contribute to regional economic growth.In order to make a contrastive analysis,the article regards the implementation of new-type urbanization as a point to divide the whole duration.The results show that the local government debt has a negative impact on regional economic growth,and after the implementation of the new-type urbanization,the inhibitory effect of local government debt has increased significantly.As for the four regions' research,it is found that the local government debt also has a restraining effect on regional economic growth,and the western has the strongest restraining effect,followed by northeast,middle and eastern.Still viewing the implementation of the new-type urbanization as the dividing point,the results showed that the local government debt of the four major regions had a restraining effect on regional economic growth too,and the inhibition was enhanced after the implementation of the new-type urbanization.Finally,we summarize the conclusion of the study,and put forward some suggestions.The suggestions including: establishing a flexible and effective macro-control mechanism;pushing forward the reform of the financial system and balancing local governments' financial rights and responsibilities;controlling the scale of local government debt strictly and defusing the risks of local government debt;establishing and improving the local government debt management mechanism;coordinating regional development balance.