Kunpeng Project
In recent years, the problem of tight local finances has become a common phenomenon and is showing an increasing trend. This is not accidental, but stems from the profound problems in China's local development model. Across the country, two main phenomena are significant: over-reliance on land policy and neglect of the rationality of the fiscal structure. This situation has put the local finances under tremendous pressure and prompted the local governments to be incapable of financial management.
First, over-reliance on land policy is one of the main causes of local fiscal woes. All localities have regarded land development as a magic weapon to stimulate economic growth, and over-relied on land transfer income. However, the instability of land policy and the impact of macroeconomic fluctuations have led to the uncertainty of local fiscal revenue. As soon as the land market fluctuates, the local government will immediately feel a huge shock. This single-dependency model makes local finances lack sufficient resilience to market risks.
Second, the neglect of the rationality of the fiscal structure is also another important reason for the tightness of local finances. In fiscal planning, some localities ignore the rationality of the financial structure, and are overly biased towards the pursuit of short-term economic interests and ignore the consideration of long-term development. This short-sighted behavior has led to the irrational allocation of fiscal expenditure, and too much investment in major projects for a while, but neglected the support of infrastructure construction and social livelihood projects, so that local finance is facing the dilemma of excessive expenditure and unclear returns.
In terms of fund management, the lack of effective supervision and control of third-party fund management is also a common problem in local finance. In some places, the selection of financing channels is too simple, and there is a lack of effective regulatory system for the review and management of financing projects. This has allowed some undesirable financing projects to breed, which eventually leads to confusion in the management of funds. At the same time, due to the inaccurate estimation of the return on financing projects, some places have invested a lot of money in a short period of time, but failed to achieve the expected economic benefits, resulting in a serious financial deficit.
From a personal point of view, I think that local governments should pay more attention to the optimization and adjustment of the financial structure. It is necessary to establish a long-term concept of development, and through rational planning of fiscal expenditures, increase investment in infrastructure and social livelihood projects, and achieve a rational distribution of fiscal expenditures. At the same time, it is necessary to establish a sound third-party fund management and supervision mechanism, improve the review standards of financing projects, and ensure the transparency and compliance of fund operations.
In real life, a province is overly dependent on land policy and regards land transfer income as the main financial policy. However, with the fluctuating land market, the province's fiscal revenue has fallen sharply and it has fallen into huge financial difficulties. At the same time, due to the imbalance of the fiscal structure, the province has overinvested in some projects with short-term benefits, resulting in uncontrolled fiscal expenditure and making it difficult to provide effective support for long-term development.
To sum up, the problem of tight local finances is due to both structural reasons and management failures. Only on the basis of comprehensively optimizing the financial structure and establishing an effective supervision mechanism can local finances usher in the dawn of stable development. At present, the first level at all levels must carefully review and adjust the development strategy, avoid single dependence and short-sighted behavior, and ensure the sustainable development of local finance.