Li, Zhenfa;
Wu, Fulong;
Zhang, Fangzhu;
(2023)
The Political Economy of China's Local Debt.
The China Quarterly
10.1017/s0305741023000814.
(In press).
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Abstract
By analysing the development and operation of local government bonds (LGBs), a new tool fashioned by the Chinese government to finance infrastructure projects, this article improves the understanding of the political economy of China's local debt. We find that the central government uses LGBs to intervene in local debt and pursue policy objectives, and designs a quota system to decide the bond issuing amount and the project selection. When calculating quotas, the central government prioritizes limiting financial risk and achieving national development goals. Local debt should match the fiscal capacity of local governments, and the projects should contribute to the sectors emphasized by the central government as important for national development, reflecting the centralization of central–local relations. However, LGBs hardly fix the problem of local debt, and the pressure to maintain economic growth by expanding infrastructure investment has pushed local debt to an alarming level.
| Type: | Article |
|---|---|
| Title: | The Political Economy of China's Local Debt |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1017/s0305741023000814 |
| Publisher version: | https://doi.org/10.1017/S0305741023000814 |
| Language: | English |
| Additional information: | This work is licensed under a Creative Commons Attribution 4.0 International License. The images or other third-party material in this article are included in the Creative Commons license, unless indicated otherwise in the credit line; if the material is not included under the Creative Commons license, users will need to obtain permission from the license holder to reproduce the material. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/ |
| Keywords: | Local government bonds, local debt, central government, central–local relations, China |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > The Bartlett School of Planning |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10174153 |
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