Can China Steer Clear of Minsky Moment?

• 来源期刊: 中国财政与经济研究（英文版）
• 关键词: Local government debt Obligation default Risk management Public governance
• 年，卷（期）: 2013,（4）
• 页码范围: 35-51
• 页数: 17页
• 语种: 英文

摘要

This paper studies issue of Chinese local government debt.It discusses formation,structure and causes of mass local debt obligations in China rapidly piled up in past few years.Based on the data compiled,it estimates that debt of local governments amounted to 19.41 trillion yuan by the end of 2012.Against this backdrop,total assets of Chinese local governments which can be used to service debt obligations are totalled to 76.54 trllion yuan.While a full-fledged financial crisis resulting from over-indebtedness of local governments is unlikely to emerge in an immediate future,insolvent problem of many local governments is pending,which may endanger stability of the banking system.The unchecked expansion of local government debt is attributed to both dramatic change in external environments and structural flaws of public governance in China 's administrative system.To contain this severe systemic risk,private fund is a main source mobilized to alleviate financial distress faced by local governments,but public governance reform,fiscal accountability rule of laws and appropriate financial instruments consist of necessary conditions to solve the possible default problem.