Abstract: The stipulations of the Budget Law authorize provincial governments to exercise the borrowing rights, making the provincial governments not only being the leaders of the financial system reform under the provincial level but also holding the powers to issue exclusive bonds, distribute debt limits to cities and counties, and manage the unified-borrowing and unified-lending business. While there exist contradictions in debt borrowing, debt using, debt repaying and mismatched level-to-level management subjects in the provinces, the debt management powers of the provincial governments are offset by the debt supervising power of the Ministry of Finance. As the switching hub in the relationship between the central and local finances, the provincial governments are not only the core of the debt management system, but also the key to the reform of tax distribution system. Limited by the degree of power separation standards between the central and local governments, the multiple functions of the provincial governments and the constraints of the debt management system, the present debt management of provincial governments is hard to meet the requirements of“the central government does not rescue”,“the provincial governments should undertake overall responsibilities”, and “the governments under the provincial governments take their own responsibilities”. Under the premise of clarifying the status of provincial governments, the direction of the institutional reforms should be turned from management to governing, highlight the multiple interaction between the central and provincial governments, between the provincial governments and the governments under them, and the governments and the markets, and realize the governance transformation of the integration of concentration and decentralization, of the integration of market constraints and government control in levels, and of the integration of democratic governance and legal governance.

Key words: provincial governments, local debt, date management, borrowing right, governance transformation