Ye Tan: Platform Debt Risk Will Not Be Exposed To New And Old Will Continue To Exist.

The Ministry of Finance recently issued the "local government's inventory and debt disposal and disposal measures" (Draft for solicitation), requiring all regions to collect and report the inventory debt and the results of screening. The provincial financial department reported before January 5th next year, and can apply for the issuance of local government debt replacement after screening the local government stock debt that is included in the budget management.

By the end of 2015, eligible financing projects for construction projects and government debt funds can not be met by the original channel. After the end of 2015, local government bonds can only be issued through provincial governments.

The theory of local power cuts is not in line with the facts. The promotion of urbanization in the future still needs strong strength of local governments. "No. 43" cuts the local government's debt hobby, aiming at promoting the comprehensive reform of local government functions, pforming from the important participants of the market economy to the public utility and public service providers, and promoting the comprehensive return of local governments.

Only from this perspective can we understand the meaning of "No. 43" in order to advance the reform in the right direction.

Restrains the Local State Corporation phenomenon, which means that the development pattern of the local government's economic competition will decide the future development order.

In the past, China's economy was mainly driven by investment. Local governments leveraged local investment through debt leverage in land consolidation, park construction and public utility construction.

Now the investment ability of local governments is no longer an indicator of assessment. The key to harmonious and efficient development of local social economy is the focus we should pay attention to.

To reform, we must deal with the remaining problems first.

The above two documents need to solve the problem of how much stock debt is, how to repay it and how the local government will borrow money in the future. The key is the disposal of local financing platform.

Local governments can borrow money, but they can not borrow money by setting up platforms to borrow businesses and local governments to increase their trust.

It is a good thing that the local investment and financing platform will not be increased and shut down. It is the only way to reduce the risk of local platform debt.

According to the audit results of the national debt audit issued by the Audit Commission in December 30, 2013, there are about 7170 financing platform companies in the country. There are investment and financing platform companies from provinces, cities, counties, districts and even townships. These companies will pform into city investment companies, divest government financing functions and not add new government debts.

Local governments are still allowed to borrow money, but their nature is different. They are no longer corporate bonds of investment and financing platforms, but special debt and general debt: the development of public welfare undertakings without revenue requires the government to borrow general debts. Local governments issue general bond financing, which is mainly paid by the general public budget revenue. The development of public welfare undertakings with certain benefits needs the government to borrow special debts.

It is reimbursed by corresponding government funds or special income.

Local borrowing procedures are strict: borrowing debts within the sub regional limits approved by the State Council must be reported to the people's congresses or their standing committees at the level of the people's Congress for approval. They can only borrow money within the limit, only for public welfare capital expenditures and moderate repayment of stock debts, and shall not be used for recurrent expenditures.

Local debt is included in local budgetary management and issued by provincial governments.

Government debt is government debt. It will not pretend to be an enterprise debt. This is beneficial to local governments.

Products such as bonds and other products are priced according to the enterprise standard, and the price will be greatly improved after the local debt is priced according to the government's credit.

In the past, there were some special purchases.

Investors are looking at the price of corporate bonds and the essence of local debt. There is a huge price deviation between them.

The reform of local debt issuance is closely related to budgetary reform.

The lack of strict budget, the issuance and repayment of local debt are all passive water and no capital.

Local debt issuance is based on the principles of administration and market. On the one hand, it needs to report the examination and approval to determine risks. On the other hand, the rating and sale of local debt must be strictly followed by market principles, and no special traders are allowed to exist in the market.

Therefore, the initial issuance of local bonds will be slow and pilot oriented. Only when the market is adjusted can efficiency be raised.