The Empirical Analysis On The Influence Of International Capital Flows On China's Economy

After 90 years of the 20th century economic globalization will bring a new era for the world economy. Globalization and liberalization of the world economy, on the one hand promots economic prosperity and development, bringing the world to improve the overall well-being, on the other hand the world economy is full of uncertainties and risks, economies become more closely linked. Expansion of the scale of international capital flows, the global financial activities go into a great impetus.However, fully affirmed the positive effects of international capital flows, we should be note that international capital flows and the flow direction over the volatility of the possible negative effects make the national financial systems from external shocks, to financial market instability, even to financial and economic crisis.From the perspective of international capital flows, the financial crisis of 2008 quickly spread to the world, there is bound to crisis-related international transmission mechanism, which is connected with international capital flows. However, what kind of relationship which between the crisis and international capital flows? This crisis originated in the international economic and financial center, commanding heights of global economic and financial crisis, in the most technologically advanced system is the most perfect, the most stringent state regulation of the financial crisis and has previously occurred in the international economic periphery, edge and systems, and inadequate supervision of the crisis region and the transmission mechanism, what is the difference? What is different between the international capital flows play a role? From the perspective of international capital flows to analyze and study is an important entry point with the current academic research.International capital flows and the international financial turmoil of profound inner connection, and long-term imbalances in international economic accumulation closely related to the increasingly developed international capital markets and trade into a crisis brewing and delivery of the main channel. For developing countries like China, financial markets are more backward, large-scale cross-border financial institutions do not have the ability to invest in derivative financial products and experience, or the market itself is not fully open, the direct loss suffered relatively light. Overall, international capital flows and the formation and development of international financial crises in developed countries and regions by means of indirect investment capital flows to the Crisis and the developed capitalist countries of Western Europe, then through direct investment and trade to conduction to the developing countries, so developing countries affected by the financial crisis and the volatility of international capital flows are closely related.In this context, the paper tries to use the channel of international capital flows, to study on China's economy such as the stock market, export trade, capital account, financial stability, the existence of significant influence, and if the impact exits, domestic monetary authorities should adjust monetary policy to reduce the adverse international capital flows, the impact and research topics of this paper was of profound theoretical and practical significance.This article studies conducted as follows:1. Short-term international capital flows between the China and U.S. stock market has significant transfer effect of volatility.This verified the existence of Sino-US stock market fluctuations are ARCH effects, and through GARCH model, describe the Sino-US stock market volatility, fluctuations generated sequence, using Granger causality test to verify the short-term international capital flows as a channel for true can play a pass between the role of U.S. stock market, which means short-term international capital flows to the U.S. stock market fluctuations transmitted to the Chinese stock market, causing the Chinese stock market volatility.Then constructed for the stock market TARCH model. Selected to reflect the scale of international capital flows, a number of indicators. Such as the embodiment of a country's financial liberalization, financial market reform level of capital account openness index, its stock market in emerging market countries promote the development, but also brought great risks; the current and capital projects of the two-surplus, resulting in the increase of foreign exchange reserves, the central bank was forced to take monetary sterilization policies, but the passive expansion of base money, thereby increasing domestic liquidity, the liquidity into the stock market, the stock market will have a profound effect; different stocks difference between the market rate of return, but also determines the flow of international capital, which impact on the stock market; 2008 subprime crisis broke out, the reversal of liquidity the world economy, the impact on the Chinese stock market volatility is also significant; the same time China's stock market found itself with non-symmetrical effect, occurs when the impact of positive and negative, impact on the stock market is different. 2. Construct the China's export dependence equations, study the impact of international capital flows to the of China's export trade.This paper analyzes the international flow of capital into our channels, the first study the international balance of payments current account (trade channel). Current account surplus remains strong momentum over the years, which is China's economic development strategy, economic growth structure, import and export trade policies and domestic economic momentum of rapid development are closely linked.In the financial crisis and the proliferation of environment, dependence on Chinese exports by empirical analysis, found that Chinese exports to the United States and the euro area has high dependence on the United States and euro zone economic factors in China's current trade key reasons for large fluctuations and decline.VAR model using the generalized impulse response function, specifically the United States and the euro zone consumer study, changes in monetary policy and the forms of international flow of FDI capital on the impact of China's export trade. Residents of the United States the impact of changes in total spending on the impact of China's exports have short-term characteristics, while Europe and the United States monetary policy and the impact of FDI has a long-term effects.3. Use of international capital flows and exchange rates, interest rate policy of linkage mechanism building VEC model.In this paper, international capital flows, exchange rates and interest rates affect the mechanism of interaction, empirical analysis of exchange rates, foreign interest rate differentials between international capital flows and long-term cointegration relationships and short-term impact effect.VEC model in building the two empirical results show that international capital flows for the linkage mechanism of the exchange rate spread should be treated differently:the exchange rate factor and the interest rate factors on short-term capital flows and the impact of long-term capital flows are completely different. Exchange rates on short-term capital flows, long-term equilibrium effects are significant, while the interest rate differentials and exchange rate factors in long-term capital flows, despite the long-run equilibrium equation is not significant, but the spread factor seems to be relatively more important than others. Therefore, the central bank in dealing with different types of international capital flows on capital account shocks, exchange and interest rates should be used to the linkage mechanism to regulate international capital flows that reasonable steps open capital account.4. Construct the China measurement of international capital flows security index system.In this paper, the scale of capital inflows, capital inflow structure and foreign exchange reserves, current indicators of three levels of 8 selected to construct the security of our international system of measuring capital flows. From the perspective of structure and size, covering China's system of international capital flows to the many factors involved, can a comprehensive and effective evaluation of China's current system of international capital flows of security. From the empirical results, the China International Capital Flow system is safe in the study period, most indicators are in safe condition, but there is a risk point, external debt structure is irrational, short-term debt proportion rose rapidly, there are certain risks. Should be adjusted to the term structure of China's foreign debt, reducing the proportion of short-term debt, reducing liquidity risk.5. Using Granger causality test to investigate in the central bank balance sheet including the degree of correlation between assets and liabilities. Using Granger causality test and the state-space variable parameter model to study the relationship between China's international payments and money supply affect the.In the past decade China has been facing balance of payments surplus in the external imbalance dual problem, a large number of international capital into China through various channels, China's real economy and financial system has a huge impact, mainly reflected in the net foreign assets to become a major component of total assets, while the central bank bills issued in the ratio of total liabilities increased year by year, total assets and total liabilities associated with very high. According to balance of payments impact of the transmission mechanism of money supply theory to examine the existence of our country, "the demand for money mechanism" and "exchange rate arrangements that" the two transmission channels, using the state space of variable parameters to verify the model. The former eventually manifested through international reserves, and international reserves through the "exchange rate arrangements way" affect the monetary base and ultimately affect the money supply. Foreign exchange reserves, the money supply affect the strength of an average of 0.606, higher than the Foreign Exchanges acting on the basis of the average strength of the currency 0.446, indicating the role of Foreign Exchanges on which the base currency "exchange rate arrangements that" does not affect the money supply balance of payments the only pathway, which indirectly proves that "money demand mechanism." pathway exists.Validate the empirical study of international capital flows on China's stock market, the international balance of payments, financial security and monetary policies have a profound impact, but also for the Chinese government to further promote the reform of RMB exchange rate regime and promote the interest rate market and improve monetary policy effectiveness of providing the appropriate theoretical support and empirical evidence.