This paper is the study of Main land China governments debt problem and takes local government investment platform for example China is now developing its economy while local government plays the main role in the investment of city’s necessary constructions. In 1994 after “tax-sharing system” had been reformed, it brought both fiscal and transactional imbalance to local government. According to fiscal imbalance and execution on “Guarantee law” and “Budget law”, specified inability to go into direct debt and to provide external guarantee in 1995, local government could only search for new informative revenue: goes into debt with bank through “local government investment platform”, on the basis of “land finance” mode, and resolve local government’s fiscal pressure. Local government mainly goes into long-term debt with bank, however the bank provides only short-term debt. Owing to it costs too long to retrieve the cost, once the deadline comes, local government turns to face embarrassment paying back, and cause to happen fiscal and financial risks. Recent years, Mainland China puts forward two policy to resolve its risks from governmental debts. First, amends the new budget law to legally allow local government to launch bonds. Second, holds “ local government debt swap” exchange local government’s loans to creditor’s right of bank.
