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Business and Globalization 商业全球化, 2015, 3, 9-18 Published Online April 2015 in Hans. /journal/bglo /10.12677/bglo.2015.32002 9 Design and Simulated Analysis of Local Government Debt Risk Warning System —Example for S Province Yuan Yao1,2*, Dandan Yu1, Jia Zhai2 1Institute for Management Science and Engineering, Henan University, Kaifeng Henan 2Business School, University of Ulster, Belfast, UK Email: *yaoyuan@ Received: Apr. 4th, 2015; accepted: Apr. 18th, 2015; published: Apr. 27th, 2015 Copyright ? 2015 by authors and Hans Publishers Inc. This work is licensed under the Creative Commons Attribution International License (CC BY). /licenses/by/4.0/ Abstract Designing overall process for warning system and starting from three aspects of internal risk, ex- ternal risk and related risk to build the index set, local government debt risk warning system was built based on cluster analysis and factor analysis. Taking S Province as an example, 108 metric data which reflect the risk of this province’s local government debt between 2007 and 2012 were selected to do empirical analysis using cluster analysis and factor analysis of multivariate statistic. It was found that S Province’s local government debt risk is in a moderate status at this stage and the province’s local government debt risk is increasing yearly; from the explanation of some ex- tracted primary factor, we can find that the fundamental starting point and end point to control S Province’s government debt risk are to reduce the total amount of debt and the percent of contin- gent liabilities, which can reduce structural risk and overall risk; furthermore, the simulation of S Province can also prove that factor analysis can analyze local government debt risk warning sys- tem well, achieving the goal of early warning. Keywords Local Government Debt Risk, Warning System, Index System, Factor Analysis *通讯作者。 地方政府债务风险预警系统设计与模拟分析 10 地方政府债务风险预警系统设计与模拟分