Over the past decade, China’s local government debt has been the focus of public opinion at home and abroad. The new budget law implemented in 2015 constructs the system and norms of local government debt in China, and at the same time clarifies the basic idea of preventing local debt risk- “open the front door and block the back door”. That is to say, under the systematic risk prevention system, local governments are allowed to issue debt in the form of general bonds and special bonds, but local governments cannot issue debt in other ways. In terms of implementation, the new system is operating well. The overall debt ratio of local governments in 2016 even declined slightly. However, there are still some local governments issuing debts in violation of laws and regulations, or implicitly issuing debts in the name of financial tool innovation. This shows that “blocking the back door” is not yet thorough. It should be noted that in order to achieve the goal of “blocking the back door”, we should also “open the front door well”. First, it is necessary to support reasonable investment demands of local governments and attach great importance to the investment efficiency of local government investment projects. Second, we need to pay attention to whether there is a problem that the local government debt management and control system is cumbersome and difficult to adapt to the flexible decision-making of local government investment.
