Study On The Linkage Trend Of International Interest Rate And China Coping

Economic globalization has increased interdependence of the international economy.Because of The Global Financial Crisis of2008financial system in the world has undergone significant changes, and national intervention is on attention. The international economic policy coordination is increasing to solve international economic interdependence issues, and international interest rate linkage also shows an increasing trend. With China’s deepening integration into the global economy, the international linkage of interest rates in China is increasingly apparent, and weakening its ability of regulation to market interest rates and economic. In the literature review, clearing the Chinese international interest rate linkage and coping research must be based on the guidance of the Marxist interest theory. By using methods of mathematical deduction and empirical testing, this paper explores the trend of Chinese international interest rate linkage and transmission mechanisms as well as the effect on the efficiency of central bank interest rate regulation, and establishes a Chinese interest rate linkage coping mechanisms.The results indicate that the essence of linkage of interest rates is economic globalization, and there are four sources of the linkage:economic globalization and financial integration and international economic policy coordination and the common factors. In normal economic period, the degree of international linkage is lower than that in the period of economic instability. In2008, the financial crisis has enhanced the linkage of international interest rates, and the linkage of international interest rates after the financial crisis is significantly higher than before. International interest rate linkage is closely connected with the Policy Trilemma for Open Economies. The factors of affecting the linkage of international interest are capital flows and domestic currency expected appreciation as well as the size of China’s foreign exchange reserves. The relationship between International interest rate linkage and the degree of capital flows is positive, and the relationship with the expected appreciation and Chinese reserve scale is reverse. The international interest rate linkage weakens the ability of Chinese interest rate policy on regulation of the market interest rate.Finally, some measures and suggestions are put forward. China should accelerate the market of interest rates and gradually liberate capital control. The central bank should take the price stability as the target. The use of interest rate corridor operating system sholud be uscd to indirect control market interest rates for stabilize the economy. To keep the interest rate policy in China is relatively independent, and China should actively participate in the international interest rate policy coordination to improve the efficiency of China’s interest rate policy regulation.