Local Government Debt Governance in China in the Past 70 Years:Review and Prospect

This paper gives an overview of local government debt governance in China in the past 70 years and looks ahead to its strategic prospect in the new era based on a theoretical analysis of debt characteristics in the transition period.For this purpose,we divide the past 70 years into fi ve stages:planned regulation,exploration,wide fl uctuations,pilot expansion,and comprehensive transformation,which is a prudent trade-off process between“incentive”and“control”objectives to deal with the strategic fi nancing game of local governments and striving to make debt governance regulated,transparent,and institutionalized.With the historic changes in social and economic development concepts in the new era,the debt governance mode needs to shift from the conventional GDP-based quantitative governance to performance governance which is oriented towards long-term benefi ts,with a focus on improving the quality and efficiency of debt financing.Guided by the new development concepts,debt governance in the new era can continue to unleash reform dividends and promote strategic adjustments at the institutional,structural,mode,and technical levels in an orderly manner,so as to lay a solid foundation for ensuring the security of fi scal operations and the sustainability of local government debt fi nancing.