Li, Zhenfa;
Wu, Fulong;
Zhang, Fangzhu;
(2024)
A Geographical Approach to China’s Local Government Debt.
The Professional Geographer
10.1080/00330124.2023.2300803.
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Abstract
Since the 2010s local government debt has boomed in China because the government relies on debt financing for infrastructure investment. The debt mainly consists of the issuance of Chengtou bonds and later local government bonds. Using data from more than 300 cities from 2009 to 2020, this article maps its spatial dynamics to further the understanding of intergovernmental relations in the studies on local government debt. We find that, from 2009 to 2014, most cities had large bond-issuing amounts. The dynamics were affected by the economic stimulus target set by the central government and the interjurisdictional competition in borrowing among local governments. After 2015 the cities with better economies issued more bonds because the central government tried to match local government debt with local fiscal capacity to maintain financial security. The spatial dynamics show the increasing intervention by the central government in local fiscal income and expenditure, reflecting fiscal centralization. Fiscal centralization did not effectively contain the financial risk in the less-developed cities. Motivated by the competition, the less-developed cities did not use bonds efficiently and had higher ratios of bond issuance to fiscal income, experiencing higher financial risk.
| Type: | Article |
|---|---|
| Title: | A Geographical Approach to China’s Local Government Debt |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1080/00330124.2023.2300803 |
| Publisher version: | https://doi.org/10.1080/00330124.2023.2300803 |
| Language: | English |
| Additional information: | © 2024 The Author(s). Published with license by Taylor & Francis Group, LLC. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent. |
| Keywords: | Chengtou bonds, China, intergovernmental relations, local government bonds, local government debt |
| 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.ucl.ac.uk/id/eprint/10188556 |
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