Premium
Hidden Fiscal Risks in Local China (中国地方政府的隐性财政风险)
Author(s) -
Ma 中山大学 Jun
Publication year - 2013
Publication title -
australian journal of public administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.524
H-Index - 41
eISSN - 1467-8500
pISSN - 0313-6647
DOI - 10.1111/1467-8500.12028
Subject(s) - china , debt , contingent liability , local government , public finance , financial system , economics , economic policy , fiscal policy , business , government (linguistics) , finance , macroeconomics , political science , public administration , linguistics , philosophy , law
Public debts as well as the fiscal risks associated with them have been a global concern for our time. This paper examines fiscal risks in China, particularly fiscal risks at the local (sub‐national) government level. Under the current system of Chinese intergovernmental relations, local governments are precluded from borrowing and offering guarantees for any borrowing activity. However, almost all of them have become deeply involved in debt finance, mainly in the form of contingent liabilities. Although there will not be a debt crisis in China in the near future, certain risks are hidden in China's local debt. This article therefore recommends China reform its intergovernmental relations and formally grant authority to local governments to borrow so that they are subject to transparent debt market constraints .