A Treatise On China's Unbeneficial Balance Of Payments And The Adjustment Of RMB Exchange Rate

As a result of a huge China's balance of payments surplus continues, more and more pressure exists to the revaluation against RMB, giving rise to increasingly appreciation anticipation of Chinese currency. Hence, China's balance of payments is obviously discontented. The persistency effects from external unbalance may press an economic adjustment, and even induce some shocks on the internal balance and macro-economic stability. While some conflicts between China and some other powerful big countries have also come forth at the same time.In order to meet a favorable balance of payments and to decrease the pressure of revaluation against RMB, we must in advance find the roots and causes leading to the unbeneficial balance of payments in China. That's to say, what causes domestic deposits much excessive than domestic investment. But the traditional theories of balance of payments can't give out the exact solutions to this problem; we are in doubt on the assumption of that the premises may not fit the situation of China. While this dissertation concludes several important premises, especially the core premise which is the unlimited labor supply hypothesis. Based on this argument, we put forward an analyzing frame, and subsequently lead to an empirical analysis with Chinese data. We then exam the possible impacts on internal balance with the reform processing of RMB exchange rate system, and conclude that there is a real dilemma in meeting both of the external and internal balance under this reform: The revaluation adjustment of RMB exchange rate itself is a costly and inefficient way in dealing with the increasingly pressure of appreciation anticipation of Chinese currency.In general, under the world of unlimited labor supply situation, the income distribution run by the Invisible Hand should be the just root of over-deposits, domestic under-expenditure, and unbeneficial external and internal economic balance. In essence, China's unbeneficial balance of payments turns out to be the consequence of internal macro-economy unbalance. The save in China mainly comes from the...