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Deadline: 30 June 2019

Managing local government debt in China

Special Issue Call for Papers

Managing government debt, especially at the subnational level, is a daunting challenge in many countries. The global financial crisis in 2008 revealed many fiscal structural issues and systematic fiscal risks. In China, with falling exports, the government stimulated domestic demand by RMB 4 trillion in 2009, largely through credit expansion by bank lending at the local level involving local government financing vehicles (LGFVs). The debt overhang remains a constraint on sustainable development today, as China may need another round of fiscal stimulus to offset trade deficits.

There are no precise figures available of subnational government debts in China. However, the scale of government debt, especially the huge amount of hidden and contingent debt in local governments, is estimated to be very high. In this PMM theme issue, we call papers for the following topics.

  • What are the political, economic, and institutional contexts for local governments to issue debt in China? How are both formal and informal tools used to accumulate debt—especially hidden and contingent debt?
  • What criteria should be used to ensure that local fiscal risks are sustainable? What are the preconditions for sustainability, and including with local own-source revenues?
  • How well does debt financing work in China? If public pricing is below long-run marginal cost, are the budgetary support mechanisms clearly identified? Which level of government should provide the support and bear the risks?
  • What institutional tools have been applied in China to manage debt risk?
  • How has the local bond market developed since 2015? Compared with other financing tools, how has the bond market worked in promoting economic and social development while maintaining fiscal sustainability? What are the preconditions for a local bond market to work in China?
  • How well has China implemented public-private partnerships (PPPs)? How are PPP-related assets and liabilities tracked without full balance sheets? Given asymmetric information, how are PPP-related risks evaluated and managed?
  • The recent policy constraints on local debt have left little room for local governments to generate fiscal resources through formal borrowing. Given this, what will be the direction for financing local development?
  • How is the resource mobilization agenda to be developed for the local government? For example, what are the potential local taxes that might fit into the overall national structure of tax policy and administration? How has revenue-sharing and considerable autonomy in spending affected local borrowing? Which kind of incentive structure is likely to be more effective in promoting local government accountability?

Submission Guidelines

PMM publishes 8000-word research papers, 2500-word new development articles, and 1000-word debate articles.Visit PMMs website for more information. See the journal’s instructions for authors for detailed instructions. Research papers will be double blind refereed.

 Authors of accepted proposals will be invited to submit a manuscript by 30 June 2019 for peer review. Authors of conditionally-accepted manuscripts are expected to submit their revisions by 30 September 2019. Submissions to PMM must be original work and not under consideration by any other publication.

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Meili Niu, Ehtisham Ahmad

and Xiaohu Wang

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About PMM

PMM has a strong reputation for joining up research and practice, as well as disciplines and professional specialties. It has been publishing for nearly 40 years, now with eight issues a year. PMM articles are reviewed by a practitioner and an academic to ensure that they are readable and useful in the real world. PMM’s circulation includes over 15,000 CIPFA members and students, as well as central government departments, local authorities and international universities.

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