Research On The Debt Risk Of Local Government In China Under The Background Of Fiscal Decentralization

Since the reform of the fiscal decentralization system led by the tax-sharing system in 1994,the central government has strengthened its macro-control capabilities by increasing its fiscal revenue to account for the proportion of national fiscal revenue and maintained the authority of the central government,but it has also led to the emergence of financial relations between the central and local governments.The new contradiction is mainly manifested in the distortion of financial power and power.Under this passive pressure,local governments face greater financial pressure.Further,the fiscal decentralization system reveals the subjective motives of self-interest in the “reasonable people” of local governments.As a result,government competition is inevitable.Driven by this,local governments are pursuing economic growth and career advancement blindly,leading to continuous growth in investment spending.Under the incentive of fiscal decentralization,local governments have gradually increased fiscal pressure due to subjective motives and passive pressure.With the rapid progress of urbanization,local governments have led to the continuous growth of local government debt and there is a problem of debt risk.In view of this,in order to prevent the emergence of a debt crisis and ensure the normal performance of government functions,this paper uses fiscal decentralization as a background,analyzes the status quo and causes of local government debt risk,and empirically tests the relationship between the two.We will propose policy proposals in both short-term and long-term terms,hoping to help prevent and resolve local government debt risks in China.This article includes five parts.The first part of the introduction includes the background of the topic and its significance,literature review,research methods,possible innovations and deficiencies.The second part describes the overview and theoretical basis of local government debt risk,and defines the connotation and classification of local government.This article includes five parts.The first part of the introduction includes the background of the topic and its significance,literature review,research methods,possible innovations and deficiencies.The second part describes the overview and theoretical basis of local government debt risk,and defines the connotation and classification of local government debt and debt risk,and also provides a theoretical premise for further analysis of the following text.The third part,on the one hand,discusses the development of fiscal decentralization in China,including the centralized fiscal management system under the planned economy,the gradual decentralized fiscal management system,and the fiscal decentralization system reform led by the tax-sharing system.On the other hand,it analyzes the current situation of local government debt risk mainly from scale risk,structural risk,potential risk,efficiency risk and external risk,and concludes that scale risk is generally controllable and local risk debt Outstanding,debt structural distortions,structural risks are prominent,there are irregular financing,potential risks highlighted,and debt management mechanisms are not perfect,there are efficiency risks,debt is transitive,external risks cannot be ignored.The fourth part takes the fiscal decentralization as the background,analyzes the mechanism of the local government debt risk from the local government's subjective motivation and passive pressure,and verifies that the fiscal decentralization will affect the local government debt risk based on the VAR model.On the basis of the foregoing analysis,the fifth section gives relevant policy recommendations.In the short term,it is necessary to strengthen local government debt management,which mainly includes standardizing financing methods,perfecting debt information disclosure mechanisms,and improving risk assessment mechanisms and early warning systems;The fiscal decentralization system starts by establishing measures such as accelerating the decentralization of government power to the market,balancing financial power and authority,and standardizing the transfer payment system,establishing fiscal relations with clear rights and responsibilities,financial coordination,and regional equilibrium,and deepening reform of the fiscal decentralization system,rooted in preventing and resolving local government debt risks.