[Abstract] since 1994, China's rapid expansion of the scale of national debt.
Papers Category:Fiscal Levy Papers
- National Debt Research Papers
Post Time:2008-7-30 8:30:00
This article refers to the international debt internationally recognized measure of the size of the four indicators, combined with Western developed countries, the situation of these indicators, the country's national debt scale comparative analysis of the rational. Finally, draw on some of the size of China's treasury bonds basic conclusion.
Since 1994, China's national debt have been expanding, especially in the past two years, with the proactive fiscal policy, the national debt and further expansion of the scale, therefore, inevitably gives rise to a number of concerns: whether the size of the existing debt over it? Such as whether the size of a heavy debt burden of debt service and thus affect future economic development? This is the academic and practical decision-making departments of common concern and can not evade reality. To have a rational and accurate answer, not only on China's current financial and economic situation and its future trends to make accurate analysis, but also through an appropriate measure of debt indicators for international comparisons of economies of scale in order to make reasonable judgments. Now, this bond on the adoption of appropriate scale to measure the key indicators to analyze the issue of China's national debt scale and a reasonable trend.
A measure of the size of the main indicators of a moderate national debt and its international comparison.
Bonds is not an isolated economic sectors with a country's economic and financial situation are inseparable. Therefore, the judge and determine the adequacy of a country's debt can not just look at the absolute value of its own bonds, it can not accurately reflect a country's debt capacity and financial burden should be conditions, which must be internationally recognized and frequently used indicators and experience data on the national debt scale investigation, and accordingly the size of China's treasury bonds to make a rational analysis of judgments. At present, internationally accepted indicators to measure the size of national debt are: (1) year treasury bond rate = the burden of balance / annual GDP; (2) borrowing rate = the year the amount of treasury bonds / GDP; (3) dependence on = year Treasury bond Amount / financial expenditure; (4) debt ratio = debt service / fiscal revenue. The first two indicators are from the perspective of the overall national economy, national debt scale, the latter two indicators are from the budgetary point of view to examine the size of government bonds. For the size of China's treasury bonds, the comparison is as follows:
(A) The national debt burden rate comparison. In theory, the state financial expenditure demand pressure and solvency, income and savings levels and gross domestic product, the size and the level of bond yields is a major constraining factor in the size of treasury bonds. However, these factors focus on the fact that the size of the gross domestic product. In other words, affect the national debt the size of the most important factor is the gross domestic product. Then, examining the relative size of national debt the most interesting and most important indicator is the debt burden rate. Since the 80's, but most countries the size of government debt has been a significant expansion of major Western developed countries, such as the size of the debt (debt burden rate) have almost doubled, however, a similar level of economically developed countries, the scale of debts are very different. The size of the debt in some countries and the GDP is only 22.5% relatively (eg, Switzerland, 1995), while some countries more than 120% (Belgium). The national debt burden of developing countries, has experienced a rate of most of the first rose and then dropped the course, indicating that the national economy of developing countries dependent on government bonds declined. A correct analysis and understanding of our country's debt burden rate, and with foreign countries when comparing this indicator can not look only at the quantitative comparison of relations, but also must grasp the following important factors, or are likely to be misleading our country's debt-oriented: its 1, with the growing scale of government bonds, China's national debt burden rate also saw a rapid growth trend. 1980 was only 1% in 1990 to 4.8% in 1995 and 5.6% in 1998 had risen to 8.2%, growth momentum is very rapid. Second, the western developed countries, high debt is built on a solid financial basis, the entire country debt debt capacity should be relatively strong. China as a developing country, not only to economic development and foreign countries have a greater than the gap, and the country's financial concentration have a much lower budget revenues in 1999 accounted for only 12.6% share of GDP, even if the coupled with a variety of extra-budgetary revenues of government departments, but also only about 20%. Therefore, the overall sense, we have the capacity of the debt to be weaker than some of the foreign debt burden rate can not simply compare and abroad. Third, the United States as the representative of the Western developed countries, their cumulative size of the reason why the national debt year to achieve high and low level of today is a hundred years down the accumulated results. In China, not long history of borrowing from the first batch of treasury bonds issued in 1981, so far, nothing but 20-year history, but the scale of China's national debt under the current momentum continues this (since 1994, China's average annual growth of national debt balance of speed of up to 30% or so) is likely to be very difficult to control the extent of borrowing and even catch up with a long history of Western developed countries. Fourth, each country the size of government debt is still heavily influenced by its economic structure, legal system and debt management mechanism factors. Therefore, before the debt-scale international comparison, should give full consideration to its economic structure, legal system and financial markets more developed areas such as constraints. General, more developed securities market, the capacity of the treasury bonds will also be stronger. 1 United States, for example, in 1995 the national debt balance of approximately 3.6 trillion U.S. dollars, up 51% of the national debt burden rate, but because of U.S. government bond market is the world's most developed government bond market, the U.S. government bond issuance has been relatively smooth. This is mainly due to U.S. government bonds are the most liquid securities market financial products, most of the securities intermediary agencies and residents of the United States favor of government bonds, rather than other financial instruments. Thus, while the country's national debt burden rate in 1998 was only 8.2%, but taking into consideration our financial concentration and degree of maturity of the securities market and other factors, our country's national debt burden rate is too high in the near future is not easy.
(B), the borrowing rate in comparison. Treasury borrowing rate refers to the year the amount of bonds issued that year GDP. It reflects the time when the increment of GDP for the year level of utilization of government bonds. Western developed countries borrowing rate is normally 3% ... 10%, while China's borrowing rate in 1994 was 2.5% in 1998 was 4.09%, generally below the level of developed countries, even with the low rate of borrowing in France, Britain and compared with Canada, but also a low 2-3 percent, which shows the overall view of the national economy, China's annual treasury bonds there is still some room. However, we should also see the fact that, from 1994, China maintained a high growth rate of debt growth rate, roughly 25% - 30%, far exceeding the growth rate of about GDP8%, therefore , the borrowing rate of this indicator will also surely rising. In most countries, this indicator remained stable condition over the years and maintained at about 8%, only Japan, Britain and Spain, and a small number of financially troubled and in countries with higher unemployment rates in the early 90s there faster growth . Reposted elsewhere in the paper for free download http://eng.hi138.com
(Iii) debt dependence comparison.
Degree of dependence on government bonds of any assessment of a country the size of the adequacy of government bonds is an important indicator. It is the value of expenditure on debt income to the extent of the arrangements, using the formula is expressed as an annual treasury bond dependency = Amount / fiscal expenditures. The legal or institutional sense, our national debt so far confined to the central government, local governments can not issue bonds. In this way, relying on debt to meet the needs of the financial expenditure can only be the central government, namely, reliance on government bonds is the target of the central finance meaningful. So. Before we make a comparative analysis, it actually is to hold the degree of dependence on central government debt (ie, the amount of the annual issuance of treasury bonds with the central fiscal expenditure ratio) and the degree of dependence on Western countries to finance the debt for comparison. China's dependence on debt is very high, the 1998 annual national financial debt dependence, and dependence on central government's debt as high as 29.65% and 71.12%, nearly higher than Japan, the United Kingdom and the United States 3-10 times. Dependence on the current debt of developed countries is generally 10% -20%, and the Japanese government even in the most difficult period of reliance on debt, but also 37%. Clearly, China to meet the 'social and public needs' as the main pattern of the central fiscal expenditure, more than half of its funding sources to rely on issuing government bonds, is not only inconsistent with the nature of government itself, but also the long run, probably unlikely, the potential risk is that self-evident. Of course, we should also see that because of national financial systems and budgeting methods, compare the degree of dependence on government bonds is that we must pay attention of their comparability. Particular attention are: first, in the degree of dependence on central government's debt in this calculation of indicators, 'the central fiscal expenditure' This index includes only the government budget expenditure, government revenue and expenditure in the current situation has been seriously distorted, accounting for a considerable large proportion of government revenue and expenditure of free government budget, a conservative estimate, extra-budgetary expenses for at least half of the total revenue and expenditure, and the central government budget to the proportion of overall government budget is also low. Therefore, the central fiscal expenditure has been underestimated in this indicator is specific to the degree of dependence on central government's debt was overvalued. Second, China's financial budgeting are not identical with the Western developed countries, such as the size of interest on debt is growing, but has not yet been included in the budget expenditures, so that the central fiscal expenditure on the books a small one. Dependence on the central government's debt has been overestimated by one. Therefore, we can not simply dependent on the central government's debt seriously high compression on the scale of government bonds to immediately come to conclusions. But regardless of how this indicator has been overestimated, while the high degree of dependence on central government's debt is an indisputable fact that should arouse vigilance, and must not be taken lightly.
(D) debt service ratio comparisons. Bond debt service rate refers to the year's national debt service amount and the ratio between revenue. Nature of the debt income paid to decide the size of the bond funds must be subject to the constraints of the situation. Therefore, we should control the scale of government bonds with an appropriate level of fiscal revenue. This indicator is internationally recognized as the safety line is 8-10%, China before 1994, due to the issue of government bonds is small, the state revenue for debt expenses also small, debt service coverage in more places, such as the in 1990 is only 6.5%. However, in 1994, the sharp increase in the size of treasury bonds, thus leading to a rapid increase in the total amount of debt payments, debt service ratio in 1994 to 9.6% from a rapid rise in 1998, 22.4%, significantly exceeding internationally recognized safety line .
2, the basic conclusions.
Through the above comparative analysis of the four indicators on the scale of China's treasury bonds, we can draw some basic conclusions: 1, a lower degree of dependence on Western countries, government bonds, government bonds pay a higher rate, and the opposite is true in our country. This is mainly two reasons: First, Western countries, the absolute amount of the annual bond issuance size of larger, but with its huge annual revenue compared to the amount seems relatively small. In the United States, the 1993 revenues of up to 1.1535 trillion U.S. dollars, while China's fiscal revenue over the same period is only 439.8 billion yuan. In terms of the current exchange rate, equivalent to 22 times China's financial revenue. Second, these western countries to introduce a market economy, relatively long history, therefore, time for issuance of treasury bonds early, especially by issuing long-term (10-20 years) the national debt as the main species, therefore, the accumulated history of a relatively large amount compared with the Its debt burden is naturally higher. 2, from above to determine the size of government bonds major economic indicators, it is difficult to put it simply, China's national debt scale is bigger or have more room to maneuver, a people to more easily accept the fact that the Chinese treasury bonds in the national economy should debt capacity to be relaxed on the contradictions among the financial debt burden, that is both relaxed side, there are serious side. So, the problem is how to resolve this contradiction, it is necessary to give full play to bond the role of national economic growth, as well as on the economic operation of the counter-cyclical regulatory role, but also to prevent the national debt too big for an unbearable pressure on revenue and expenditure to avoid, as some developing countries as a result of government debt problem into a credit crisis and financial crisis. 3, from the dynamic trend, China has experienced since the scale of issuance of treasury bonds since 1994 to more than 30% of the speed of rapid expansion of those who are facing tremendous pressure and the risk-increasing. The next few years, as long as the domestic and international political and economic situation is not a major mutation of the growth in scale issuance of treasury bonds in the 'fine tuning' may be an effective policy option. Taking into account the total national debt policy inertia in the next few years to compress the size of treasury bonds is unrealistic, and does not conform to the current implementation of the proactive fiscal policy, the objective requirements, but the scale of issuance of treasury bonds in order to maintain a continuous growth in recent years also can not survive the. Therefore, the realistic option can only be growth in the 'fine tuning', and that this 'fine tuning' can only be built on 'the revitalization of the financial' and 'optimize the debt structure' basis, ie to improve the 'two proportions' or national level of disposable financial resources, based on the size of a modest expansion of government bonds. At the same time, we must continue to adjust the debt policy, regulate the bond market, optimizing the debt structure and debt capacity of the national economy should get a better release.
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