Analysis of China's Local Government Debt Risk Causes and Resolution Pathways

In recent years, local government debt risk has emerged as a significant constraint on China's high-quality economic and social development. The continuously expanding scale of local debt, its complex structure, and notable regional disparities present substantial challenges, with county-level government debt risks being particularly prominent. Multiple factors—including real estate market adjustments, weakening land finance revenues, and tightening financing policies—have contributed to frequent debt defaults and credit risk events in certain regions, significantly intensifying debt sustainability pressures. To advance risk mitigation, authorities have implemented "three-debt integrated management," exploring the unified administration of explicit government debt, implicit debt, and local government financing vehicle (LGFV) debt. Various measures have been employed to optimize debt structure and effectively contain new debt while resolving existing liabilities, including refinancing bond replacements, platform company restructuring, asset revitalization, and financial alliances. This paper analyzes the root causes of local government debt risks, systematically examines current challenges and governance effectiveness, and proposes targeted policy recommendations. These include further strengthening long-term risk prevention mechanisms, enhancing budget constraints and information disclosure, focusing on industrial upgrading and fiscal system reform, and promoting sustainable and refined local debt management. This research provides both practical reference and theoretical guidance for local government debt risk resolution.