A Preliminary Legal Study Of Dissecting Government Financing Function From The Local Government Financing Vihecles

Under Article 35 of the New Budget Law,"provincial governments can raise the capital required to build their investments through the issuance of local government bonds.The local government and its subordinate departments shall not raise the debt in any way".Thereafter,the local government can no longer borrow the debt in such form as the financing platform.Since 2008,the local government financing platform has expanded largely and then it has been asked to spin off its functions for government borrowing.Breaking off connections from the government is difficult to solve the need of local government public funds from the source,thus how to obtain the capital legally is the difficult part of the transformation.The introduction of this paper first address the research background as stated above;Secondly,it compares the status of domestic and foreign research.The research on local debt of other foreign countries has certain reference value for China.The domestic researches mainly focus on the hidden loopholes and solutions of financing platforms.Finally,this paper elaborates on the significance of this paper.With existing measures of government,this paper analyzes the difficulty of the dissection,its compliance and its operability under the legal perspective.In the first chapter,the paper interprets the legal ground of the dissection between the government and the financing platform,based on the New Budget Law and the follow-up documents from the state council and its functional departments.It interprets the legislative intent of Article 35 which is to regulate local government borrowing and to eliminate the borrowing through local government financing platforms by means of legal interpretation.Hereafter,the intention of the regulators is very clear.They aim to gradually divest the government financing platform financing function.However,the regulatory documents are difficult to implement.It is still a long way to go.The second chapter discusses the transition of financing platform.First of all,the paper briefly discusses the historical attributes of the financing platform of 14 years ago,before the promulgation of the New Budget Law.As a legal entity,the platform had to perform government functions at the same time.Then the paper addresses after 14 years,there are two difficult points of dissection of the financing platform.One is the government's guarantee in the transformation of the financing platform,and the other is the public asset of the financing platform.The third chapter discusses in detail of the guarantee of financing platform.It first discusses the liability for guaranteeing the stock or debt problems.It also discusses the processing of guaranty liability for the debts of the stock under the status quo.Part of debt are screened for replacement for government debt,and other parts are denied government guarantees of their responsibilities.And it further analyzes the denial behavior,the liability and compensation based on private law,Security Law and the Judicial Interpretation of Security Law and the liability.Secondly,the transformation of financing platform security model was discussed,and the significance of government guarantee agencies that function as platforms to limited by guarantee.Its dangers are lack of supporting policies in legal system,unknown regulatory responsibilities,and problems in state-owned guarantee operating agencies.The paper finally puts forward the ways of tackling state-owned guarantee agencies management risks.The fourth chapter discusses the historical problems of public capital contribution,namely,the ambiguity of the ownership,the unreal investment,and the weak liquidity,which is not conducive to the protection of creditors.After the implementation of the land special bond,the role of the assets and public assets of the platform company is differentiated,so that the financing of land projects is compliant,and the total amount of government debt is easy to calculate and control.The fifth chapter describes the feasible operation model after the financing platform has been transformed.Firstly,it needs to adjust the function of financing platform.Then it clarifies the government debt and platform company debt.Finally,it discusses the ways to deal with new demands of financing.Through this paper,the government's current actions concerning the stripping financing platform can get a relatively complete legal analysis.The paper expects to contribute certain practical significance to the exploration of the complicated debt management system of local government at all levels.