On March 20, the School of Finance hosted the 190th Capital Finance Forum and 277th Paper Seminar in the second lecture hall of the Boyuan Building. Gan Li, a Tenured Professor from the Department of Economics of Texas A&M University (TAMU), Dean of the Research Institute of Economics and Management of Southwestern University of Finance and Economics, and Director of the Survey and Research Center for China Household Finance, was invited to deliver an academic report on the “Defects of the Control Indicators on National Debt Scale and the Current Government Debt Scale in China”. The event drew more than 150 faculty members and students, both in-person and online. Zhao Daping, Deputy Dean of the School of Finance, presided over the meeting, with notable attendees including Wu Weixing, Deputy Party Secretary and President, Yin Zhichao, Member of the CUEB Party Standing Committee and Vice President.

Gan Li began by introducing the effectiveness of the Treaty on European Union (the Treaty) in the Eurozone, delving into the feasibility of aligning China’s government debt management with the Treaty’s guidelines. He then discussed the ceiling calculations of the explicit debt ratio, the deficit ratio, and the municipal government debt ratio in prefecture-level cities. Highlighting the inherent issues with the debt-to-GDP ratio metric in a low-interest-rate scenario, Professor Gan noted the overarching trend of economic deceleration among leading developed economies over the past three decades, coupled with a general decline in risk-free interest rates. In such an environment, despite an expansion in the scale of government debt fueled by reduced borrowing costs, it is challenging to maintain a 3% deficit ratio and a hypo-60% debt-to-GDP ratio simultaneously. He provided data on the contrast between the explicit and implicit debt of local governments in prefecture-level cities. Meanwhile, Gan shared his insights on the impact of the permanent expansion of fiscal deficit on the government debt rates and deficit ceiling calculations, supporting his arguments with a model.

During the session, Professor Gan engaged in discussions with teachers and students on various topics, such as China’s government debt scale and its future development. Zhang Lu from the School of Finance had an in-depth discussion with Gan about “the transmission of local debt risks to the household sector and its microeconomic impacts”. The report concluded successfully with active interactions between participants. Professor Gan’s insightful suggestions for future research direction and methodologies were greatly appreciated and beneficial to all attendees.