China’s local government debt risk assessment and countermeasures under the influence of COVID-19

Abstract

Under the influence of COVID-19, the global economic and social development is facing great challenges. With the increase of government financial pressure and the decrease of debt paying ability, the problem of debt risk of local governments in China is attracting wide attention. In order to measure the level of China’s local government debt risk under the influence of COVID-19, this paper takes China’s Sichuan Province as an example, collects the core indicators data of measuring local government debt risk in 2017-2020 years, and uses AHP-TOPSIS method to make a comprehensive analysis of the local government debt risk situation in different periods before and after COVID-19. It is found that the local government debt risk in Sichuan Province is generally controllable. However, influenced by COVID-19, in 2020, the overall level of local government debt risk in Sichuan province expanded by 22.1% compared with 2019, this is mainly due to the further expansion of debt scale and slower economic growth. This paper suggests that the Chinese government should speed up the construction of comprehensive early warning and supervision system of local government debt risk, and prevent and resolve the debt risk of local government in advance.