Research on local government debt
|School||The Central Party School|
|Keywords||local governmental bonds management system of bonds municipal bonds|
In order to combat the financial crisis, China stated clearly in December, 2008 that a moderately easy monetary policy combined with a proactive fiscal policy should be adopted for the macro-control policies. In this context, local governments have lent their support to these expansionary policies of the central government by means of large-scale investment and financing, which generates a large quantity of new debts to the local governments. Together with the long-term accumulation of the debts, the new debts have constituted a serious problem to the local governments, in particular for this period of time. If left unresolved immediately, the problem could be a time bomb to the credibility of the local governments, which in turn could damage the sustained, steady and sound development of the national economy. Therefore it is of great significance to investigate the debt problems of the local governments under such circumstances.This paper has attempted to investigate this problem with the aid of tools such as threshold analysis vs. empirical analysis, qualitative analysis vs. quantitative analysis and the practice with theory method.This paper consists of five chapters. Chapter one provides a description of the present situation of local governments’debts, in addition, the scale, structure and the potential effect have been investigated emphatically. In chapter two the causes of the problem have been analyzed from various aspects like internal demand, policy factor and reality, etc. Chapter three introduces the management pattern of local governments’debts in other countries which could be categorized into unitary states and federal states, with Japan and US as the specific cases. Chapter four attempts to figure out some solutions to the debt problem of the local governments by drawing upon other countries’experience and taking our own country’s reality into account. Among all the solutions, special attention has been paid to the solution of issuing local treasure bonds. Chapter five is the summary part.In this paper, several major conclusions have been drawn: China should further deepen the reforms of local governments’debt management system and the mechanism of financing for debts. As for financing mechanism, a gradual change from central government issuing bonds to a direct local government issuing bonds is required.