Abstract: In recent years, the problem of China’s local government debt risk is becoming prominent, and the assessment of and early warning against debt risks are receiving much attention. Through constructing a local government debt risk early warning system based on the comprehensive indicators, this paper makes an empirical analysis of China’s local government debts. The findings show that China’s local government debt risk is generally controllable, but the average risk level shows a slight upward trend, and the risk levels of some provincial-level local governments have been increased. On the one hand, Beijing, Shanghai, Guangdong and the Yangtze River Delta region have the lowest risk level because of their large economic growth potential and strong solvency; on the other hand, some provinces in the northern and central regions have higher risk levels under the pressure of hidden debt problems and financing needs. Therefore, we should pay attention to the check and management of the hidden debts of local governments, and establish an effective risk early warning mechanism, so as to timely monitor, prevent and specifically address local government debt risks.

Key words: local government debt; debt risk; risk warning system; comprehensive indicators