Research On The Currency Dependence In China 's Economic Transition

The history of the development of economic is also the history of the development of the money. The money rose from the development of economic and constantly evolved along with the improvement of economic development. With the development of commodity economy, the market is becoming much bigger. The market is absolutely necessary, so as the representative of the wealth, the money is becoming more and more important. Nowadays, the economic is showing the commercialization and marketization, as it, the money in the economic is absolutely important. Finally, the monetization of economy is more and more high, and the money dependent of the economic is also coming larger. At the present time, China has run into the key stage of the economic transformation. The more market factors have been introduced into the economic system. The commercialization and marketization of the economic become higher, the breadth and depth of the market is also even bigger, and the scale of the deal that depended on money is getting huge. From the reform and opening-up policy, the monetary aggregates are large because of the scale of the market. However, subject to the incompletes of the economic system reform, especially because the interest rate and exchange rate have not established the reasonable formation mechanism, the quantity and structure of the money is quite unreasonable.Looking from the quantity, the economic marketization has leaded to the rapid growth of the economic and created such a large wealth, so that the money should increase its quantity to adapt to this. However, in recent years, the increase rate of money is much higher than the growth rate of the economic. The average annual growth rate continues on the much high side. Because of the foreign exchange management policy, the dependent on money is more and more high. So much money filled in the market will lead to the inflation expectation. In the end, it is difficult for the country to make the economic transition and structure adjustment come true. Looking from the structure, the configuration of the money is unreasonable from the country to the people, from industry to industry, from area to area, and from town to rural. The configuration of the money does not reflect the principle of efficiency. More and more money have inflow into the government and the monopoly industries. The principle of power plays a large role in the configuration of money. And it has lead to crowding out and distribution effects that has brought the efficiency loss of the overall economic system.This article talks from the market-oriented reform, to analysis the road of China’s reform and opening-up, to discuss the trend of the money increasing, to trace the configuration of the money, and in the end to think about the effects of the trajectory of money development. On the basis of the above analysis, the author tries to change the Fisher equation to adapt to the new situation of economic. From this, the author puts forward the structure of the new system, that is, three economic structure differentiation. Based on these, the writer makes his best to measure the flow of the money to the three parts. In the end, the author comes to the conclusion that the money increase basically is appropriate to the economic growth. But, due to its excess, it has accumulated to such a big risk. So to deeply the reform of the monetary system is absolutely necessary.The author says, in order to achieve a sustainable development, firstly, the money quantity should be controlled. Beside this, the structure should be adjusted. In line with the principles of the control increment, revitalize the stock, we should optimize the allocation of monetary structure, and constantly improve the utilization efficiency of currency, monetary resources optimization configuration; we also should set up the core principle of the progressiveness in the optimization structure so that more wealth should give to the people not the government. Secondly, the boundary between the market and the government should definite clearly. We should stick to the pace of market-oriented reform, to introduce more market factors to the economic system, to break the bondage of the inherent ideas, to make the system perfect, especially the interest rate and the exchange rate system, to reduce the government administrative intervention and encourage the people to hold the exchange reserve to spread the risk.The paper contains seven parts. The first part introduces the background, the method, the innovation points, and the literature review. The second part puts the noun explanation that may be involved in the paper forward. The third and the fourth parts talk about the trend of China’s reform and opening-up that is the basis of the back parts. The fifth part talks about the effect of the money increase. The sixth part makes a quantitative analysis about China on the basis of the New Fisher equation to measure the structure of the excess money. Also, the author lists the possible road that may adopt in the future. In the last part, basic on the above analysis, the author puts forward the suggestions that can ease the risk the high dependent on money will bring in.