Source: Bloomberg

In recent years, with the sharp decline in land transfer income, economic growth has slowed down, and the increase in nucleic acid testing and epidemic prevention sealing expenditure has caused Chinese local governments to face unprecedented debt burdens.

According to Goldman Sachs Group estimates this week, including the government's official loan and the debt held by local government financing platforms and policy banks, the government increased to RMB 156 trillion (US $ 23 trillion) last year, which is equivalent to domestic production126%of the total value (GDP).In addition, Chinese President Xi Jinping also emphasized that preventing and resolving local government debt risks is one of the major issues of economic work this year.

In many important forums held in China recently, resolving local government debt risks has become a topic of discussion.Government consultants and economists have made suggestions on how to resolve debt and strengthen public finances.Here are some of the details.

Real estate tax

In order to control housing prices for more than ten years, China has continued to discuss the real estate tax on the implementation of real estate taxes across the country, but it has progressed slowly.In 2011, Shanghai and Chongqing launched a pilot. In 2021, the Standing Committee of the National People's Congress announced that it authorized the State Council to carry out pilot work in some regions.Historical landslides appeared in the Chinese property market, and the real estate tax plan was temporarily put on hold.

Former Treasury Minister Lou Jiwei said at a meeting in January that the opening of real estate taxes is conducive to providing a continuous source of income for local governments and getting rid of land financial dependence.In March, he published an article in a magazine that real estate tax is the most suitable for tax types for local taxes. After the economic transition to normal growth, pilots should be carried out as soon as possible.

Reduce government level

Li Yang, chairman of the National Financial and Development Laboratory and former Consultant of the People's Bank of China, suggested that as part of the "system reform", it can reduce the local government level.

He said between the China Development High -level Forum Meeting in March, "These reforms are the truth to eliminate redundant staff and adjust their functions. It should be said that there are still challenges."

China currently has a fifth -level finance, and has long been criticized due to low efficiency and too many personnel.According to the website of the China Development and Reform Commission, China has been carried out since 1998, and has been carrying out the reform of township institutions with "withdrawal of townships, streamlined institutions, and diversion personnel". According to statistics from the Ministry of Civil Affairs, as of September 30, 2004, the number of towns across the country nationwideIt was 37,166, a decrease of 9,770 from 1995, and reduced 86,400 people.

In 2006, the Report and Reform Commission reported that the pilot pilot of the reform of "provincial management counties" and "township and wealthy county management" was further promoted, and the city management county system was gradually canceled in conditions for conditions, and township budgets were classified into county -level financial management.Gradually form a three -level fiscal system for the central, provincial, and cities (counties).

The Ministry of Human Resources and Social Security of China stated that as of the end of 2016, there were 7.19 million civil servants in China, which increased by about 200,000.The data has not been updated since then.If the number of non -profit institutions such as schools, hospitals and research institutes, the number of people who pay wages will be several times.

Assets and debt replacement

Li Yang said at a high -level forum in China that the scale of government assets and the proportion of GDP is getting higher and higher, which provides a problem of solving problems.He pointed out, "If we must solve the problem of government debt, then we do something between assets and debts and do some work in assets."

According to Zhang Sangyuan, an analyst at Oriental Securities, the total investment in China's infrastructure since 2001 was 1.84 trillion yuan (27 trillion US dollars).

Last year, the General Office of the State Council of China released the opinions of further activation assets to expand effective investment, including infrastructure project assets in key areas such as revitalizing transportation, water conservancy, clean energy, and affordable rental housing.China also encourages the listing of infrastructure public offering REIT, which is not only conducive to resolving local debt risks, but also expands the future sources of funds for public facilities.

Transfer payment

Although fiscal revenue is often concentrated in the superior government, expenditure is usually borne by the lower government, especially the county -level governments, causing the county and township to depend on the transfer payment of the superior government.

The Chinese Ministry of Finance stated in the budget report of the two sessions that the central government arranged more than 10 trillion yuan ($ 1.4 trillion) on local transfer payment in 2023.This is equivalent to 86%of the local government's general public budget this year, and in 2015, about 66%.

Before the long -term reform of local governments' revenue is completed through measures such as the reform of the real estate tax and the reform of the taxation system, the transfer payment must continue and maintain growth.

Ding Shuang, chief economist of Standard Chartered China and North Asia, said that the central government continues to transfer more funds to the local government in the short term. This includes not only fiscal revenue, but also funds raised by debt issuance.