New development: China’s debt transparency and the case of urban construction investment bonds

Bo, Lan; Mear, Fred; Huang, Jingchi

doi:10.1080/09540962.2017.1282254

Cited by 18 publications

(5 citation statements)

References 1 publication

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“…The financial pressure can be decomposed into three indicators according to the different sources of financial revenues. In China, the three main sources of local government revenue for infrastructure investment are budgetary fiscal revenue, land-grant premiums, and funds borrowed through local governments' financing vehicles (LGFVs) [40,41]. Due to the different regulations from the central government for each revenue source, different types of financial pressure have different impacts on PPP adoption.…”

Section: Data and Variablesmentioning

confidence: 99%

Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China

Zhang

et al. 2019

Sustainability

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Local governments around mainland China initiated over 14,000 public–private partnership (PPP) projects with a total investment of 18 billion RMB in recent years, but nearly half have been withdrawn since the end of 2017, which raised wide concerns about whether PPP can contribute to the sustainable infrastructure development in urban China. In this study, we empirically investigated major factors affecting local governments’ PPP adoption, especially factors that led local governments to initiate inappropriate PPP projects. Based on a unique panel dataset of 286 Chinese cities between 2014 and 2017, the empirical findings suggested that local governments’ financial pressure was the most important factor and cities with higher off-budgetary debts or lower budgetary deficits tended to initiate more PPP projects. PPP projects initiated under off-budgetary burdens were more likely to be inappropriate and subsequently withdrawn. Based on the empirical results, we provide policy suggestions to promote sustainable PPP developments in China.

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Section: Data and Variablesmentioning

confidence: 99%

Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China

Zhang

et al. 2019

Sustainability

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“…Table 1 summarizes the credit ratings of outstanding UCIBs by 2017. Only 4.13% of UCIBs' credit ratings are evaluated as AA-or below, which seems at odds with its high default risk reported in Bo et al (2017). The reason might be that UCIBs' credit ratings only reflect the overall risk, instead of individual default risk by local governments due to soft budget constraints.…”

Section: The Development Of Ucibs Between 2009 and 2017mentioning

confidence: 96%

Political competition, spatial interactions, and default risk of local government debts in China

Hou

Lyu

et al. 2022

Papers in Regional Science

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The paper investigates the institutional mechanism behind increasing local government debts and default risk in the last decade in China. Using prefectural‐level data from 2010 to 2017, we study the default risk on local government debts through the lens of spatial interactions. Empirical results identify positive spatial interactions of default risk among political neighbouring cities, but not for merely geographic or economic neighbours. Moreover, the spatial interactions vary with local leader's political incentives. These findings altogether suggest the spatial interactions of default risk is driven by political competition among local leaders. The study also rules out alternative explanations such as resource flow effects.

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“…Local governments are major players in urban construction investment and public service supply in China [27][28][29]. The fiscal revenue and spending caused by Chinese local governments have a huge impact on urban development [30].…”

Section: The Formation and Evolution Of The Financing Of Urban Develo...mentioning

confidence: 99%

Land Financialization, Uncoordinated Development of Population Urbanization and Land Urbanization, and Economic Growth: Evidence from China

Guo

Zhong

et al. 2020

Land

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In recent years, it has become common practice for Chinese local governments to inject land assets into financing platform companies and use them as mortgage or credit guarantees to obtain bank loans and issue urban investment bonds, which is known as “land financialization”. This study investigates the impact and mechanism of land financialization on the uncoordinated development of population urbanization and land urbanization in China. Theoretical analysis and empirical analysis results based on the data of prefecture-level cities in China from 2006 to 2015 demonstrate that land financialization by local governments is a significant cause of the uncoordinated development of population urbanization and land urbanization, and the pressure of urban economic development will strengthen this negative impact. Extended analysis further reveals that in areas where population urbanization and land urbanization are uncoordinated, land financialization, while promoting urban spatial expansion, will lower land use efficiency and have an inverted U-shaped influence on economic growth due to a weak agglomeration effect. The above conclusion shows that urbanization driven by debt-based investment is unsustainable. Efforts should be made to establish a financialization system that propels sound urbanization and to build a stable input linkage between land financialization and the supply of urban public service.

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New development: China’s debt transparency and the case of urban construction investment bonds

Cited by 18 publications

References 1 publication

Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China

Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China

Political competition, spatial interactions, and default risk of local government debts in China

Land Financialization, Uncoordinated Development of Population Urbanization and Land Urbanization, and Economic Growth: Evidence from China

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