News says local debt has risen from 4 trillion to 7 trillion

Author: Zhu Xiaomong, a trainee journalist, has reported that local debt has soared from 4 trillion to 7 trillion in just a few months.　　According to experts, up to 7 trillion or more local debt could drag down China's nascent economic recovery.　　At present, the local debt issued in the form of various forms and local government financing platform is not included in the local budget, the budget constraint of borrowing funds is not in place, the transparency and the normative are insufficient, all of them are easy to risk.　　The State Council May 26 convened a meeting to deploy to strengthen the management of local government financing platform and deal with the debt problem of financing platform company. In the 2010, with the number of local government investment and financing platform and the rapid development of financing scale, the debt scale of local government investment and financing platform is also expanding rapidly.　　Large-scale investment and financing have also brought high debt to local governments.　　"Local debt" was again pushed to the forefront of public opinion. Soaring Chinese-style local debt recently, it has been reported that local debt has soared from 4 trillion to 7 trillion in just a few months.　　According to experts, up to 7 trillion or more local debt could drag down China's nascent economic recovery. China Banking Regulatory Commission, chairman of the Banking Regulatory Commission in 2010, the second economic and financial situation analysis of the briefing, said that by the end of 2009, local government financing platform loan balance of 7.38 trillion yuan, an increase of 70.4%. Accounting for the general loan balance of 20.4%, the whole year new loans of 3.05 trillion yuan, accounting for the total new general loans of 34.5%. This is close to the world's recognized cordon 60%.　　Visible in 2009, in response to the financial crisis shocks, the local government circle of money. "The size of local debt is actually a very difficult question to answer accurately."　　"When asked about the amount of local debt," said Zengkanghua, director of the Finance department at the Central University of Finance and Economics. Statistics from the CBRC show that: by the end of May last year, the provinces, districts and municipalities in the whole country set up 8,221 investment and financing platform companies, of which up to 4,907 county level platform.　　From the local platform company loan debt and local government financial resources, the debt rate is 97.8%, some urban platform companies loan debt rate of more than 200%. Expert analysis, local debt in a short period of time the reason for the substantial increase is: the 1994 tax reform, on the one hand, objectively strengthen the central government's financial resources, weaken the local government's financial resources, and transfer, payment system is not perfect, which also directly affect the financial resources of local governments;　　The local government also undertakes a large amount of public affairs expenditure. In this case, it leads to the relative lag of the local government's debt mechanism transformation and system reform, combined with the pressure of insufficient local financial resources, the "Ming rule" that the budget law prohibits local financial liabilities is replaced by the "unspoken rules" of the fact that the general liabilities, which has also spawned many local leaders ' distorted view of indebtedness, That debt is not afraid to return money, oneself borrowThe wrong logic that people can still borrow money without paying. Further fuelling the local government's blind borrowing, which in turn spawned a "legacy of borrowing, the future of debt," the strange phenomenon, for local government officials, "who borrowed more, who in the tenure of the greater achievements",　　The mechanism also gives local government officials a strong incentive to borrow. The looming local debt crisis in 2009, China's national debt balance of about 6.2 trillion yuan, foreign debt balance of 386.8 billion U.S. dollars, the total equivalent of 2009 GDP of 26%, in accordance with international standards, is still within the security range.　　However, the accumulation of bloated local government debt in the past year will also be one of the biggest risk factors in China's macroeconomic operation. Zhang June served as the head of Investment management company of a city finance bureau in South China. Financial Bureau to his main task is to the city government organs of the assets of the reorganization and activating.　　Because of the difficulty, Zhang June often frown upon this errand. But into 2009, Zhang June suddenly frequently received the local major commercial banks Shing in charge of dinner invitations.　　Even more let him wonder is between cheering, the former head of the bank in the past have intentionally or unintentionally to ask Zhang June have loan demand, and the unprecedented pat chest said if there is a need to fully meet. Thus, Zhang June quickly contacted the major commercial banks loans, did not think is the way "green".　　From March to May registered capital of only 50 million yuan of the Investment management company, from the major commercial banks to obtain a total of 4 billion yuan loans, Zhang June swept past the sad, daily Ruddy.　　Believe that when and Zhang June also happy with the country's provinces, cities, counties, thousands of investment management companies in charge. The Central bank survey results show that by the end of May 2009 The local government's more than 3,800 investment and financing platform total assets of nearly 9 trillion yuan, the debt rose to 5.26 trillion yuan, the average balance of assets and liabilities rate of about 60%.　　The 5.26 trillion-yuan debt is equivalent to 15.7% of the country's GDP last year, 76.8% of the country's revenue and 161.35% of its local revenue. "At present, the local debt issued in the form of various forms and local government financing platform is not included in the local budget, the budget constraint of borrowing funds is not in place, the transparency and the normative are insufficient, all of them are easy to risk."　　"Liu Junmin, deputy director of the Comprehensive Policy Research Institute of the Ministry of Finance Science. In addition, the CICC research report further shows that 2009 net new liabilities of about 3 trillion yuan, the 2010 and 2011 follow-up loans are expected to be about 20,000 to 3 trillion yuan, about 10 trillion yuan at the end of 2011.　　That is to say, many local governments will be far more indebted than they are at this level, and will face huge risks.　　Institutional reform is a topic that cannot be bypassed. At present, the central and local financial distribution relationship is neither reasonable nor stable, which is not a secret, which is also one of the reasons for the local debt. After the 1994 tax-sharing reform, a considerable part of the state's revenue was subsumed into the central government, although the current budget lawand other laws, which strictly prohibit local fiscal deficits and local government borrowing, but in fact, the local governments at all levels to varying degrees to expand the deficit, debt to live or run in debt, it has proved that these debts are mostly in the hidden state. Therefore, the local government development is the plan, Shing is also a big event.　　Changing the institutional barriers to local government's economic development is the ultimate cure. Background information What is local government bonds issued by the local government is called local public debt, referred to as "local debt", it is as a form of local governments to raise revenue, the income is included in the local governments budget, arranged by local governments scheduling.　　Local government bonds are generally used in the construction of local public facilities such as transportation, communications, housing, education, hospitals and sewage treatment systems. The so-called local bonds in our country are relative to the national debt, and the local government is the principal issuer.　　From the late 1980s to the early 90, many local governments had issued local bonds in order to raise funds to build bridges. At present, laws and regulations expressly stipulate that local governments cannot borrow. The 20th article of the People's Republic of China Budget Law stipulates that local government budgets are compiled according to the principles of income and expenditure, and that no deficits are included; Article 28th stipulates that local governments may not issue local government bonds unless otherwise stipulated in the Law and State Council documents.