Research On Risk Control And Prevention Of Government Debt Of Dafeng District,Yancheng City

The reform of tax-distribution system,implemented in China since 1994,has brought about financial difficulties in local governments.In 1997,the financial storm in Asia gave the local economies a further blow and the domestic economy fell into a decline under the pressure.Faced with the economic predicament,the central government tried to stimulate the economy and ensure the people's living standards by enlarging money supply and adopting an open and active financial policy.Meanwhile,the central government required local governments at all levels to increase investment in infrastructure construction.For the fulfillment of these tasks,the local governments resorted to financing platforms to raise a loan for lack of funds.In view of the government background of the platforms,the platform debts of the local governments,guaranteed by the government,expanded rapidly and had soared high to 5,000 billion by 2009 as reported by the departments concerned.Huge government debts had led to great payment risks and caught the attention of the central government.In recent years,to strengthen the management of the local government debts and prevent illegal loans,Chinese government has issued several regulations and taken a series of measures in the effort to prevent and resolve the risks of local government debts.This paper aims at analyzing the major government debt risks Dafeng District,Yancheng,is facing at present within the theoretical framework of fiscal decentralization and risk management,based on the interpretation of such concepts as local government debts,local government payment risks and government risk prevention and control.The findings of the present study show that the current government debts of Dafeng District are generally in control,but risks still exist in terms of scale,flow,policy,management,as well as implicit debts.The study also demonstrates that these risks mainly result from inadequate information disclosure,lack of standarization in managing and loaning systems,and shortage of financing channels.Borrowing the experience of other local governments in prevention and control of government debts,such as Ningbo,Nanjing,and Zhangjiangkou,this research points out that Dafeng District should strengthen its risk prevention and control through increasing comprehensive revenues and compressing debts.