Abstract: Soft budget constraint is considered the main reason for the rapid expansion of local government debts, while land element and credit resources constitute the resource basis of the soft budget constraints. Based on the announcement of audit findings, this paper studies the characteristics of local government debts, which leads to the following conclusions: (1) the whole scale of local government debts is under control, while the liquidity of financial funds should be attended; (2) local government debts show significant heterogeneity. The amount of debts is larger in high-income areas, which was mainly concentrated on the levels of municipal and county governments; the debt scale in low-and-middle-income areas is relatively higher, concentrating on the levels of provincial and municipal governments; (3) the resource basis of debts is different from place to place. The absolute amount of bank loans in high-income areas is bigger, while the lower-and-middle-income areas rely more on land transfer and the transfer payment from the exchequer. Therefore, the key solution to this issue is to speed up the factor market growth, reform the borrowing mechanism and rationalize the relationship between the finance and taxes.

Key words: local government debt; soft budget constraint; land element; credit resources