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Modern Chinese history of domestic public debt

Author: PanGuoZuo From: www.yourpaper.net Posted: 2007-11-19 08:53:35 Read:
[Summary] Since the 1930s, research on the history of modern Chinese domestic debt has made certain achievements, but there are also some notable problems are mainly four: (1) When there is an urgent need to Modern Chinese domestic debt problem a system, a special study, so that the associated specifically with can be an early launch; (2) must contact Modern China's political, economic and military's development to study modern Chinese domestic debt; (3) should broaden the Modern Chinese domestic debt history of the research field, deepen research level; (4) the use of modern bond theory to analyze the modern history of Chinese domestic debt, to provide a reference for the formulation of the national debt policy today.

[Abstract title] Modern Economic History

[English Abstract] Public debt, which had had profound influences on the Finance and banking as well as economy of all Chinese governments before 1949, was obviously a very important problem in China 's modem history of economy. Researches into China's external public debt have been started early enough in the academic community that a lot of related scientific achievements have been scored. On the contrary, however, there have been few special or systematic researches regarding the public debt in modem China. So, it is highly necessary to enhance the said researches. The public or internal debt in question means the total amount of money borrowed by all the previous central governments of modem China or by local governments with the approval of the central government, including (1) public bonds issued by the Ministry of Finance , those issued by the Ministry of Railways, Ministry of Communication and the Commission of Construction as well as some other relevant departments of the central government, and (2) government bonds and treasury bonds as well as debtsbased on contracts and agreements. While researches on China's internal debt started as early as the 1930s were far form being perfect, those that have been conducted by contemporary scholars are just oriented towards historical periods and special subjects. So far little has been achieved in terms of comprehensive researches. Scholars failed to pay due attention to the researches during the long period from the founding of new China through the 1980s, in which was published only one monograph entitled Materials Regarding the History of Old China's Public Debt (translated name) compiled by Qian Jiaju. It was not until after the Third Plenary Session of the Eleventh Central Committee of the CPC that scholars began to show interest in researches into the history of modem China's internal debt. With the researches deepening, they have tended to reach objective and fair conclusions. For example, Jin Pusen, who made a more active and impartial judgment of the pre-war (1937-1945) 10-year policies regarding the internal debt of the then government than ever before. He appraised the policies positively while pinpointing its class limitations. From the 1930s on, certain progress was made in this regard, which provides a good foundation for the further research on this topic. Nevertheless, there have ever since been quite a few problems and weaknesses that deserve attention, mainly including: Firstly, as Wu Jingping pointed out, although the internal debt is part of the contents of all almost textbooks on modem Chinese history and contemporary Chinese history, works on the periodic history of the Republic of China, and other textbooks and monographs on the history of economy, finance, or banking, there is a lack of systematic and special researches except for the above-mentioned book by Qian Jiaju. Secondly, there is a tendency of doing researches out of context. Instead, they should be carried out in the broader context-the then political, economic and financial context -according to the fundamental Marxist principles on productive forces and relations of production, and the economic base and the superstructure. We should, through political and economic criticism, judge the nature and use of the internal debt and find out the different characteristics of modem China's internal debt from those of the capitalist internal debt and socialist China's internal debt. For example, modem China's internal debt contributed to the survival and consolidation of the governments; it was chiefly for a non-productive purpose; it became one of the causes for the lopsided development of the banking industry; and it was known for its bad credit. Thirdly, The research area is limited. We should expand the research area, including not merely the rules on the issuance of government loans but also their uses. In fact, the object of the study of internal debt also includes direct loans, secured loans, etc. Lastly, it is a tough challenge to take in making an analysis of modem China's internal debt by using the contemporary theory on public debt, to serve the purpose of today's economic construction. Since the 1980s, China has taken the application of the policy of public debt as an important measure to speed up modem socialist construction, thus expanding the scope of national debt gradually. Especially after 1998, thanks to its active financial policies, China has maintained the relatively high rate of loaning for successive four years, with the balance of national debt increasing from 777 billion yuan at the end of 1998 to 1870 billion yuan at the end of 2001. With the rapid expansion of government loaning, its risks have kept increasing. In this connection, it is a challenge for both theorists and practitioners to tackle the problem: how to keep an appropriate rate of the increase of national debt and establish a reasonable structure of national debt in order to guard against and eliminate the financial risks.

[Words] bonds / domestic debt / financial / Modern China

public debt / internal debt / finance / modem China

Debt problems, is a very important issue in modern Chinese economic history, successive governments in its 1949 fiscal, financial, and socio-economic profound impact. Modern China's foreign debt (foreign bonds) research, academia conducted earlier, more concerned about Chinese and foreign scholars have been fruitful. Comparison of modern China's domestic debt (domestic bonds) study the relative lack of system, specialized research is still rare. This paper tries to make a review of the academic evolution of the 20th century, the modern history of Chinese domestic debt, and research trends of the future history of domestic debt outlook to the History of Modern Chinese domestic debt has been to promote.

First, the concept of clarifying

Defined by the bonds of economics, public debt means 'government for the mobilization of financial capital, the use of national credit, to the debt borrowed by domestic and foreign investors' [1] (p.97), as a financial areas, generation of public debt later than taxes. Bond System of the modern sense, is to appear with the generation of the capitalist relations of production, development and at the end of feudal society. Of capitalist relations of production in the earliest Italian public debt in the modern sense. Stage of laissez-faire capitalism, the expansion of the internal and external functions of the capitalist countries, making government expenditure rapid expansion, only through a large number of issuing bonds to raise funds to make up for the budget deficit, public debt system has been greatly developed. To the end of the 19th century, the beginning of the 20th century, capitalism from free competition into monopoly stage - the stage of imperialism, unprecedented expansion of the functions of the state, the frequent occurrence of war and economic crisis at home and abroad, the financial crisis ensued, the public debt into a new development period, increasing the scale of increasingly sound system, bonds Governments intervention in economic life has increasingly become an important tool.

Bonds of different standards, can be divided into different categories. Geographical issue, can be divided into domestic bonds and foreign bonds. Borrowings and bonds issued by the government in their domestic bonds issued object is to their own companies, enterprises, social groups or organizations, as well as personal. Issuance and repayment of the national currency settlement payment, generally will not affect the balance of payments; government to the governments of other countries, the borrowing of the banks or international financial organizations, as well as bonds issued abroad, foreign bonds, foreign debt issuance and repayment of principal Interest Payment should use foreign exchange. Classification level of government by issuing bonds, can be divided into central government bonds and local government bonds. The central government bonds are bonds issued by the central government, and local government bonds issued by the local government bonds. Makes the state power in the socialist countries, the unified national budget as a whole to come forward borrowing, so that the central government bonds equivalent to the national debt. View from Western capitalist countries, local financial independence to the central budget, and thus may be more stringent regional sub-central government bonds and local government bonds, local bonds is a part of the entire public debt, but not the 'national debt'. In summary, in accordance with the express provisions of the Budget Law of the People's Republic of China ", at this stage, China's local governments are not allowed to issue bonds in the capitalist countries 'public debt' including 'national debt' and 'local government bonds' two components. Of course, with the further deepening of reform, China may place bonds. In addition to the above classification method, but also from other angles classification, can be divided into short-term bonds, medium-term bonds and long-term bonds issued for a period; bond units of measurement can be divided into physical bonds and currency bonds; bond borrowing can be divided into mandatory bonds, patriotic public debt and public debt; divided by the presence or absence of interest and interest payments can be divided into interest-bearing bonds, prize bonds; whether bonds can circulate freely divided, can be divided into the listing of the bonds and not listed bonds, and so on.
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