3.1 improve the local government bond issuance and enforcement of legislation related to constraints
Must first modify the "Budget Law" the second eighteen provisions prohibiting local government borrowing, and the "security law" and "Bankruptcy Law" the relevant provisions of the content; Second, to develop "local government bond management measures," the issuance of local bonds , trading, settlement, information disclosure, the intended use of funds, funds constraints, reimbursement arrangements, credit rating, asset-backed and debt crisis to make a comprehensive and systematic arrangement; Finally, the local debt issuance, trading, settlement and information disclosure, etc. should be included in the "Securities Act" management constraint areas.
3.2 Strengthen the administrative supervision, establish a sound mechanism for hard constraints
First of all, the right of local government bonds should belong to the Central Government for approval, the Central Local Government bonds can be formed Audit Committee for approval as a local government bond issuance, the executive subordinate to the Ministry of Finance. In addition to the size of the local government bond issues to consider local needs, but also must be included in the overall size of government borrowing, the overall investment budget and the scale of national budgets; Second, local governments issue bonds to establish a scientific calculation method of the size and solvency, to keep local government bond size and the size of a reasonable proportion of the revenue and expenditure, to prevent the debt crisis of the local government; again, local government bonds to fund specific purposes, only for local infrastructure and utility development; Finally, the clear responsibility of local governments who and the strengthening of local supervision by the NPC. To prevent local governments through the issuance of vanity projects out of local government bonds Local government bonds or misappropriation of funds, local government leaders must be clear with the responsibility of bond funds, and this responsibility should any problems arise not because of changes in leadership positions of individuals removed. Meanwhile, the local people's congresses should strengthen the supervision of local government bonds act, local governments issue bonds must be approved by the local People's Congress for approval.
3.3 The establishment of risk prevention mechanism of local bonds
First, local governments issue bonds monitoring mechanism should be established to local residents. This not only makes clear the debt funds, but also enable local residents to participate in decision-making, to ensure consistent use of debt capital needs of local residents, so debt capital construction projects must be made public so that local residents can fully express their views and recommendations; Second, to build local information disclosure system of government bonds. This is the safe operation of local government bonds play an active role in the constraints, it can not only bind the Government bonds of non-rational behavior, or the central government to play a macro basis and premise of the supervisory role of the local residents. When local governments issue bonds to be issued by the provisions of the bond status and its financial operations to the public, the information disclosed in addition to government revenue and expenditure information, building information on the project itself, the bond approval, scale use, the term , interest rates, the repayment, release procedures, risk disclosure, should also be timely disclosure; Finally, to establish a sinking fund and local government bond investors protection fund, and improve local government settlement and government debt default bankruptcy system.
3.4 to further deepen financial reform, to establish the relative independence of local government financial authority
Reform the tax system in 1994 further exacerbated the financial authority of local government powers and asymmetric, and local government powers and financial authority of local symmetry of the core legal basis for government borrowing. Local government should be based on the characteristics of responsibilities to construct the local property rights, the right of local property rights should be taxes, fees and claims the right of three parts. Therefore, the central government should first improve the local tax system, the rich and increase local tax revenue taxes, to effectively change the local lack of the main taxes, income less than the status quo, and the appropriate legislative powers given to certain tax areas, allowing local governments to issue local bonds with a more reliable income security; Second, to further improve the intergovernmental transfer system, strengthen and standardize the special transfer payment system, improve the allocation of funds, monitoring the use of funds, intergovernmental fiscal relations to achieve the legal system. Finally, the central government should also allow local governments to enter the market transactions of property rights aspects in order to solve the fiscal problems, to ensure that local governments issue bonds not limitations.
From 2009 the local government bond issuance of situation, not encouraging, especially the first day of Anhui Province is also notes a "zero-subscription", that means the local government bond issuance in China is still a new thing, investors should be accepted there is a long process of local government bonds is a complex reform project should be completed after the close of the system design re-open.