The Debt Scale of Local Governments and the Way for Them to Mitigate the Risk

In recent years local governments have been increasing their debt dramatically.Some local governments have been confronted with an increasing pressure of repayment and others have been faced with debt risk.All this is thought to be caused mainly by the local governments' failure in taking their financial and personnel responsibilities that match up to their debts,reforming their financial system in time and eradicating the defects existing in the administrative system.In order to mitigate the debt risk facing local governments and ensure that the Chinese economy and society can develop in a steady and firm way it is suggested local governments should try to perfect the financial system which is based on a system where tax revenues are shared by central and local governments,strengthen their capability of mitigating debt risks,push forward the reform of their investment and financial system,establish a mechanism with which various economic and social risks they are to be faced with can be mitigated in a diversified way,deepen the reform of the current system of administrative control and aggrandize the local governments' debt control and supervision.