중국 지방정부 부채 구조에 관한 소고(小考): 부채 형성의 구조적 문제점 분석을 중심으로 = A thought of the Debt Structure of Chinese Local Governments: Mainly Focusing on the Structural Issues in Debt Formation

다국어 초록 (Multilingual Abstract)

The escalating debt issues of Chinese local governments have become a subject of considerable scrutiny and analysis. Against the backdrop of the global economic challenges posed by the Covid-19 pandemic, the focus on the debt structure of various economic entities has heightened with particular attention drawn to the local governments in China. During the three-year-long response to the Covid-19 crisis Chinese local governments have incurred substantial fiscal expenditures related to pandemic control measures. These include vaccination campaigns quarantine protocols medical relief efforts and support for livelihoods. These fiscal commitments have played a pivotal role in accentuating the debt issues faced by local governments. Simultaneously the sustained downturn in the real estate market marked by the sequential bankruptcies of major real estate companies adds another layer to the fiscal challenges confronted by local governments. The ensuing reduction in revenue notably from land sales has further contributed to the deterioration of fiscal health. The debt structure of Chinese local governments has evolved in close association with Local Government Financing Vehicles (LGFVs). These entities established by local governments to secure investment funds have played a crucial role in borrowing from banks and issuing corporate bonds. The funds raised by LGFVs have been primarily directed towards social infrastructure construction and real estate development. However structural issues including mismatches in fund maturity and the operational and repayment structure of projects have compounded with the recent downturn in the real estate market, leading to persistent risks of debt default. In essence the challenges in the real estate market have substantially constrained the income derived from land sales a vital revenue stream for local governments. This study aims to delve into the formation process and structural intricacies of the exacerbated local government debt. It employs a theoretical framework that considers the administrative nature of LGFV management, along with concepts such as fiscal decentralization and soft budget constraints to provide a comprehensive examination and analysis of the current state of Chinese local government debt.