Risk Analysis Of Local City Investment Bonds In China

In 1994,Chinese tax-sharing reform caused mismatch between local government’s financial power and power,which led to a decline in local government fiscal revenue.At the same time,China was in a critical period of urbanization,so,local governments need a lot of money for municipal construction.The main features of infrastructure construction projects are long construction time,huge investment amount and most of them with public welfare,that is,low profitability.In addition to the provisions of the 1995 Budget Law,local governments cannot issue local government bonds.Under this circumstance,in order to solve the huge funding gap,the local government can only raise funds for infrastructure construction by setting up a financing platform,and the concept of urban investment debt is gradually formed..As a financial tool for local government financing,city investment bonds can effectively help the government solve the problem of insufficient funds for urban construction.Although its emergence has its important significance,with the continuous expansion of the scale of local government investment,the city The risk of investment has also begun to gradually emerge.For example,the credit risk caused by insufficient local financial capacity,the credit risk of improper management of the city investment company,or the risk caused by the inaccurate rating of the rating agency.In recent years,urban investment risk incidents have also appeared frequently.For example,in June 2011,Yunnan Road Investment Credit defaulted,and the government broke the letter of default after the capital increase.In 2016,on April 18 and 19,the company’s net profit after audit in 2015 was negative.Chinese research on urban investment bonds is relatively rare.In recent years,the No.43 document,the new "Budget Law" and the No.23 document issued this year have introduced new regulations on local government debt problems,combined with the new situation.The analysis of the risk of urban investment debt is even rarer.Therefore,this article will start from the concept,origin and development of urban investment debt,and at the same time combine the latest policy documents,gradually research and analyze the risks and prevention of urban investment in the new situation,and then combine the case of city investment company,specific Exploring its risks,pointing out its various problems,and finally giving preventive measures and recommendations for related risks.This paper will be composed of five parts.The first part is the introduction,which mainly introduces the research background and research framework of this paper.The second part is the basic theory and literature review.It mainly introduces the concept of city investment debt,related theories and the research results of Chinese and foreign scholars.The third part mainly introduces the basic situation of H county urban investment enterprises and the development process of city investment bonds and related policies;the fourth part will analyze the risk of H city local city investment risk;the fifth part is further combined with H county city investment The risk of the city’s urban investment bond gives the corresponding risk prevention measures.