Research on Local Government Debt Risk Warning Based on Government Comprehensive Financial Reports

Abstract

In recent years, China’s rapid economic growth has driven investment expansion at various levels of government, resulting in a continuous increase in local government debt. While local governments often rely on substantial borrowing to meet funding needs for economic development and infrastructure improvement, this accumulation of debt also introduces potential fiscal risks. To effectively prevent and manage these risks and ensure national economic security, China launched a comprehensive government accounting reform in 2019, shifting from the traditional cash-based accounting method to the accrual basis. Through the compilation of comprehensive government financial reports, information on assets, liabilities, revenue, and expenditures is disclosed in a more systematic manner, significantly enhancing the completeness and transparency of fiscal data. The improvement in transparency not only provides a solid data foundation for external assessments of local governments’ financial conditions but also facilitates in-depth analyses of debt structures and potential risk points. On this basis, relevant authorities can more scientifically identify and evaluate debt risks, thereby providing a foundation for the formulation of practical and effective debt management policies. This, in turn, contributes to the effective control of fiscal risks while promoting the sustainable and regulated development of public finance.

Received: 24 September 2025 | Revised: 14 January 2025 | Accepted:18 April 2025

Conflicts of Interest 

The author declares that he has no conflicts of interest to this work.

Data Availability Statement

The data supporting the results of this study can be publicly obtained on the website of the China National Bureau of Statistics at https://www.stats.gov.cn/.

Author Contribution Statement

Kai Zhang: Conceptualization, Methodology, Validation, Investigation, Resources, Data curation, Writing – original draft, Writing – review & editing, Visualization, Supervision, Project administration, Funding acquisition.