Analysis and Research on Local Government Debt Problems in China

Abstract

As China is in the process of urbanization, local governments often assume the responsibility for the construction of most public facilities, and thus have strong investment needs. Under the current trend of large and growing local debts in China, local governments in all regions and at all levels in China have a lot of debt operations and complex debt relationships. The accumulation of local debts leads to the out-of-control of the scale of debts, which seriously affects the normal operation of government agencies and hinders the development of the economy, which is prone to huge financial risks and social conflicts. In order to control the risk of debt, the central government began to adopt a series of policies in 2018 to implement debt limit management for local governments, and the national local government debt limit was 21 trillion yuan. In this context, this paper starts from the status quo and problems of local government debt, accurately analyzes the causes and mechanisms of debt formation, and proposes specific measures and methods to rationally control debt growth and reduce risks, in order to strengthen local government debt management and resolve social conflicts. This article provides guidance advice.