地方政府发行债券之门打开

The issuing of these bonds is part of a four-region trial program launched by the central government on Oct 20 that also covers Guangdong and Zhejiang provinces, as well as the city of Shenzhen.　

Supporters of the move say that allowing regional governments to issue bonds directly will help improve transparency in local government debt. But why have these four particular regions been chosen to be a part of the first trial program? Financial analyst Ye Tan has this to say.

"The reason is that these four regions are faced with the same problems relating to economic restructuring. They have to transform their economic structure from being focused on manufacturing to being more focused on the service sector, as well as making a transition from low and middle end manufacturing to high-end alternatives. Therefore they have the factors to consider when issuing bonds."

Faced with the same problems, these four regions enjoy similar advantages-they are all located in coastal developed areas. Lin Shuanglin, an expert with the School of Economics at Peking University, believes that there are other factors that support the choice.

"They are in developed areas, and they have strong financial solvency."

Before Oct 20, local governments were banned from directly issuing debt - the bonds were issued by the Ministry of Finance on their behalf.

But the fact is, the ministry issued 200 billion yuan in bonds on behalf of regional governments in 2009 and again in 2010, far less than the amount local governments actually needed.

Lacking a funding channel, regional governments set up a number of financing vehicles, or trust companies to bypass the law and borrow from financial institutions. The National Audit Office said in June that 6,500 such entities borrowed 10.7 trillion yuan at the end of 2010, 27 percent of the gross domestic product that year.

Expert Lin Shuanglin believes that letting regional governments sell debt directly onto the market will help make governments' books more organized and prevent the chaotic accumulation of debt through financing vehicles.

"In the past, the local governments had no right to issue bonds, so they had to borrow money from banks through financial companies. The local governments already have a huge amount of hidden debt, why not we bring the debts out into the sunshine? Issuing bonds in public will help build open and transparent local government budgets."

Compared to the trillions yuan in hidden debts, this amount, several billion yuan of local governments bonds has limited power, but it represents a step forward when it comes to financial restructuring.

Some experts, however, are afraid that the change in issuing policy may end up simply being a financial bonus handed out by the central government. Analyst Ye Tan disagrees with this opinion.

"In fact, local governments must be on their own in regard to the costs and risks of bonds issuing, so it's definitely not a bonus."

Experts suggest that these four local governments should set up a just and transparent budget system, and accept the supervision of regulatory authorities and the people.

For CRI, I'm Zhang Ru.