Research On Problems And Solutions About The Relationship Evolving Between Local Government And Financing Platform

Since the day of its birth,the financing platform has been inextricably linked with the local government,with the saying of “backing the mayor and facing the market”.As an important financing mode for local governments,the financing platform,in accordance with the administrative instructions of local governments,has raised a large amount of construction funds for local governments through various channels,which has supported the functions of local governments in providing public services and public goods.It can be said that the financing platform is the pocket of the local government.But the relationship between local governments and financing vehicles is not permanent.In 2014,with the state council introducing the policy about strengthening the opinions of the local government debt management and the implementation of the “budget law”,the debt financing platform of government and public functions of project financing was stripped.Local government financing behavior through the financing platform was explicitly banned.Local government and the people’s congress were not as a financing platform for credit guarantee.At this point,the channels for local governments to obtain construction funds through financing platforms were completely cut off,and financing platforms could not use government credit for financing,so their survival and development were faced with a huge test.This paper integrated use of literature analysis,case study and interviews and other research methods,putting the basic concepts such as the local government debt,the relationship between government and enterprises financing as points of view to present the basic situation of the local government financing platform and introduce the relationship between local governments.This paper studied the problem and the concept,background,theory involved to have a comprehensive understanding of the topic.Then,on the basis of principal-agent theory and institutional change theory,the relationship and evolution process between financing platforms and local governments in the former and latter two different periods were analyzed by taking the new policy on central government debt and the introduction of supporting laws and regulations in 2014 as the boundary and the basic analytical framework of the evolution of the relationship between them was constructed.Taking Zhengzhou City Construction Investment Company for example,the evolution of relationship between the local government and financing platform were analyzed and problems faced by all stakeholders in the process of evolution were discussed.This paper showed that the causes of the problems were from three aspects,that is the central government,local government and the financing platform.Finally,in view of the practical problems and challenges faced by the stakeholders in the process of evolution,this paper put forward the general ideas and reasonable suggestions to solve the problems from the perspectives of the top-level design of the central government,the implementation of the financing platform promoted by local governments and the self-improvement of the financing platform,for the reference of all parties.