Theories based on fiscal guarantees cannot explain either the fact that the continuously decline in local fiscal resources has not significantly increased local government financing costs, or the fact that local government debt has been rising at a time of strict central government regulation. The theoretical and empirical analyses provided in this study show that it is the financial resources under local government control that provide the implicit guarantee for local government debt. Such financial resources lower local governments’ financing costs but have the potential to lead to the contagion of financial risk through local government to the financial sector. Therefore, to look at the question solely in terms of either fiscal or financial sector guarantees will not be sufficient to resolve the problem of local government debt. The central government needs to coordinate fiscal and financial policies under a joint management framework in a way that rationally disperses and resolves the risks attached to local government debt and avoids the assumption of excessive risk by either sector. At the same time, close attention should be paid to local financial institutions’ asset quality and their money market reputation to avoid the risk of contagion from local financial institutions to local public finance.

The great impact of monetary policy on bank risk-taking, facilitated by a liquidity mechanism, significantly complicates the macro-prudential supervision process. Surprisingly, limited scholarly research has delved into this particular issue. Hence, in this paper, the liquidity variable is introduced into the dynamic linear model to depict the liquidity mechanism by which monetary policy affects bank risk-taking. Based on micro-data from 133 commercial banks in China, this paper empirically tests using systematic Gaussian mixture models estimation and a panel smooth transition regression model. The findings reveal that while monetary policy does not exhibit a significant risk-shifting effect. A marked liquidity transmission effect, however, is observed, whereby easy monetary policy noticeably exacerbates bank risk-taking. This impact becomes more pronounced as liquidity levels improve. The most significant negative impact of monetary policy on bank risk-taking occurs when bank liquidity reaches approximately 43%. Moreover, when banks maintain high levels of liquidity, the statutory deposit reserve ratio exerts a greater regulatory effect than other monetary policy tools. Contractionary monetary policy imposes noticeably weaker restraints than expansionary monetary policy, particularly in banks with higher liquidity levels. Moreover, the interplay between monetary policy and bank risk-taking is contingent upon not just the liquidity level of banks, but also their asset size and capital adequacy.

By incorporating both the fire sales contagion mechanism and the bankruptcy contagion mechanism into a bank network model, this paper examines how risks are generated under dynamic shocks. In particular, this paper constructs systemic risk indicators suitable for analyzing multiple rounds of contagion under different shocks (time dimension) and from institutions and assets (spatial dimension). Indicators that measure the indirect relevance between institutions and between assets are also innovatively built. It is found that due to deleveraging or bankruptcy among a large number of banks, the systemic risk exhibits an upward trend marked by intermittent jumps under varying intensities of shocks. Risks are generated mainly through the fire sales contagion mechanism of deleveraging under small shocks, and through the bankruptcy contagion mechanism under large shocks. In terms of influencing factors, a stronger indirect relevance, a lower leverage skewness and a higher leverage level in the banking system lead to higher risks. In particular, the influence of leverage skewness on systemic risk is stronger than that of leverage level.

How small and medium-sized (SMS) rural banks, as the main banks offering rural financial services, serve all-round rural revitalization is a vital realistic and policy issue for the time being. Now, SMS rural banks are confronted with many shortcomings in serving rural revitalization due to dull financial service supply chain circulation and lack of coordination with the rural industry supply chain. The research based on survey data and typical cases shows that the key to solving these problems is to realize a double chain linkage of the financial service supply chain and the rural industry supply chain: The financial service supply chain and the rural industry supply chain should make use of their common infrastructure, share the digital technology capacity and data handling capacity and promote the linkage of customers, channels and scenarios in all links of the two supply chains in a bid to realize mutual promotion and improve the quality and efficiency of the two chains and hence fuel the all-round rural revitalization through industrial revitalization. Double chain linkage can be achieved through five major effective means: in terms of data, collaborating with digital rural governance and strengthening data collection and utilization; in terms of industry, collaborating with core entity enterprises and strengthening the supply chain financial service capacity; in terms of ecology, collaborating with internet technology companies and enhancing ecological, scenario and technological enabling; in terms of channels, collaborating with rural service and focusing on channel linkage, offline network, mobile services and village financial officers, etc.; and in terms of cooperation, constructing the common infrastructure of SMS rural banks and boosting the efficiency of digital enabling innovation.

The Report to the 20th National Congress of the Communist Party of China (CPC) decides to “comprehensively promote the great rejuvenation of the Chinese nation through Chinese modernization” as a central task, listing nine essential requirements for Chinese modernization with the creation of a new form of human civilization as its goal. This paper analyzes the evolution of Chinese modernization led by the CPC and the pursuit of civilization, and reveals the inner connection and unity between Chinese modernization and the new form of human civilization. It is helpful to deeply understand the historical logic, realistic logic, and future logic of Chinese modernization, enabling better study and implementation of the spirit of the Report to the 20th National Congress of the CPC. Also, this paper boosts confidence in the path, theory, system, culture, and history of building a modern socialist country in an all-round way and promoting the great rejuvenation of the Chinese nation.

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