বৃহস্পতিবার, ৩ জুন, ২০১০

China's local debt increased from 4 trillion to 7 trillion crisis

It is said that the local debt within a few months, has soared from 4

trillion to 7 trillion
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. Currently, in various disguised forms, and

local government financing platform where the form of debt issued is

not integrated into the local budgets, borrowing funds in the budget

constraint is not in place, transparency and standardization are

inadequate, and are easily lead to the risk.



It is said that the local debt within a few months, has soared from 4

trillion to 7 trillion. According to experts, up to 7 trillion or more

local debt,Dell vostro 1000 Battery may drag down China's pace of economic recovery has just

begun.

Currently, in various disguised forms, and local government financing

platform where the form of debt issued is not integrated into the

local budgets, borrowing funds in the budget constraints in place,

transparency and standardization are inadequate, and are easily lead

to the risk.

State Department May 26 meeting, the deployment of the platform to

strengthen local government finance management and processing platform

for the company's debt financing.

2010, with the number of local investment and financing platform for

the rapid development and financing of the scale, the local government

investment and financing platform for the liability scale are

enormous. Large-scale investment and financing to local governments

also brought high debt.

"Local debt" once again pushed to the media on the cusp.

Soaring Chinese local debt

Recently, news that the local debt within a few months, has soared

from 4 trillion to 7 trillion. According to experts, up to 7 trillion

or more local debt, may drag down China's pace of economic recovery

has just begun.

China Banking Regulatory Commission Chairman Liu, in 2010, the CBRC

held a second analysis of economic and financial situation, said the

information session, to the end of 2009, local government financing

platform loans was 7.38 trillion yuan, up 70.4%. General loans

accounted for 20.4%, annual 3.05 trillion yuan of new loans, accounted

for 34.5% of new ordinary loans. This is from the universally

recognized warning line is very close to 60%. Shows that in 2009, in

response to financial crisis, local government misappropriating the
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fierce.

"Local scale how much debt is actually a very difficult question to

answer accurately." When asked how many of the local debt, the Central

University of Finance and Head of the Financial Institute of Finance,

Professor Kang Hua such statements.

Statistics from the China Banking Regulatory Commission: 5 at the end

of last year, provinces, districts, municipalities, the establishment

of 8221 total investment and financing platform for the company, of

which up to 4907 county-level platform. Platform companies from the

local loan debt and the Comparison of the local government financial

resources, debt was 97.8%, part of the city of platform companies loan

debt exceeds 200%.

Some experts have analyzed the reason why the local debt increased

significantly in a short time the reason is: the reform of tax system

in 1994 degrees, on the one hand, the objective to strengthen the

central government's financial resources, weaken the local government

financial resources, and transfer payment system not perfect, it has a

direct impact on local government finance; the other hand, local

governments have to bear the substantial expenditure of public

affairs.

In this case,Gateway m460 Battery
resulting in conversion of local government debt system,

and reform is lagging behind, coupled with inadequate local financial

resources generated by the pressure available to the Budget Law

prohibits local financial liabilities "clear rules" were in fact the

general liability The "hidden rules" forced substitution, but also

gave birth to many local leading cadres distorted view of debt, debt

that is not afraid to pay back the money, its also by others, can not

repay the money borrowed to error logic, further contributed to the

local government blindly borrowing, which gave birth at the local

level, "previous to borrow, repay future generations," the strange

phenomenon, for local government officials, "who borrowed more

achievements in office who is the greater", which mechanism for the

existence of strong local government officials borrowing power.

On the verge of debt crisis

In 2009, China's national debt balance of approximately 6.2 trillion

yuan, 386.8 billion U.S. dollars foreign debt balance to a total

equivalent to 26% of GDP in 2009, according to international

standards,Dell d820 Battery
is still within the safe range. However, the accumulation

of the past year expansion of local government debt, will become the

largest of the macroeconomic risk factors.

Zhang Jun as a city in South China under the Bureau of Finance head of

investment management companies. Financial Bureau gave him all the

city's main task is to sort out the assets of government agencies

activate. As difficult, Zhang Jun, often frown upon receipt of this

errand.

But entering 2009, Zhang Jun suddenly burst into the major commercial

banks received the local people in charge of public business dinner

invitation. Still he was surprised that Gongchoujiaocuo between the

past have a high-ranking bank executives have intentionally or

unintentionally, there is no demand for loans inquire Zhang Jun and

unprecedented Paixiong Fu said that if there is a need to meet certain

full.

Thus, Zhang Jun quick links major commercial bank loans, did not

expect is a team of "green." From March to May is only 50 million yuan

registered capital of the investment management company, from the

major commercial banks to obtain loans of 40 billion yuan, Zhang Jun

swept past sad, day glow.

I believe wound up with Zhang Jun as happy were the provinces, cities

and counties thousands of head of investment management companies.

Central bank survey showed that as at the end of 2009, five more than

3,800 local government investment and financing platform, nearly 9

trillion yuan of total assets, liabilities rose to 5.26 trillion yuan,

an average rate of about 60% of assets and liabilities. Liabilities of

5.26 trillion yuan last year, the national GDP, equivalent to 15.7%,

76.8% of the national revenue, local financial revenue of 161.35%.

"At present, in various disguised forms, and local government

financing platform where the form of debt issued is not integrated

into the local budgets, borrowing funds in the budget constraints in

place, transparency and standardization are inadequate, and are easily

led to risk." Ministry of Finance Integrated Research Institute, said

Jun-Min Liu, deputy director of Policy Research.

Otherwise, the money to study the report further showed that the net

new debt in 2009 of about 3 trillion yuan, is expected to follow in

2010 and 2011, loans of about 20 thousand to 3 trillion yuan, about

the end of 2011 to reach 10 trillion yuan. In other words, many local

government debt will far exceed the financial revenue, will face

enormous risks.

Reform is a topic not be avoided

The moment, relations between central and local governments allocated

unreasonable and unstable, is not no secret, it has become one of the

reasons the local debt.

The reform of 1994, after a considerable amount of state tax revenue

included in the central government, despite the current "Budget Law"

and other relevant laws, strictly prohibits the local budget deficits

and local government debt, but in fact, most local governments in

different extent,Dell inspiron 1300 Battery
increase the deficit, running her debt or liability,

the fact that these debts are mostly in the recessive state.

Therefore, the local government is engaged in the development plan,

Qianzhaihuanqian is big. Changes in local economic development,

institutional barriers to the plan is the root of the problem.

Background information

What is the local debt

Where the local government issued bonds as government bonds, referred

to as "local bonds", which local governments raise revenue as a form

of release, and its income in the local government budget, scheduling

by local governments. Local government bonds are generally used for

transportation, communications, housing, education, hospitals and

sewage treatment systems, the construction of local public facilities.

China's so-called local bonds, is relatively debt, the local

government to issue bonds to the main body. Of the 20th century to the

late 80s early 90s, many local governments to raise funds road bridge,

which had been issued local bonds.

Currently, local government laws and regulations can not be clearly

defined borrowing. "The People's Republic of China Budget Law"

Diershitiao expressly provides that local government budget by living
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within our means, the principle of balance of payments prepared, not

out in the deficit; second 18 provides that, except as otherwise

provided in law and State Department documents, the local government
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not issue local government bonds.

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