| Chinese economy has been growing fast since the reform and opening up,GDP per capita rose from about 200 U.S.dollars in 1978 to above 8000 U.S.dollars in 2018,simultaneously,the family wealth rose rapidly,the Chinese household financial assets(excluding property)has reached 140 trillion yuan,each household's financial assets rose to 320,000 yuan.Chinese households started to consider wealth management and asset investment with the rising accumulation of household wealth.The household would like to allocate asset globally with further opening of Chinese economy.Especially since 2009,Chinese private wealth has increased by five times,individual overseas investment annual growth rate reached above 20%.The size of wealth hold by high-net-worth individuals has almost tripled,and over 50%of them had intention to allocate asset globally.The Chinese households have stronger desire to invest in multiple regions and multiple currencies,and diversify its portfolio,household asset allocation has become one of important approaches in cross-border capital movement,and households may become the important agents in international capital flows.To meet the diversified domestic and overseas asset allocation demand and effective management in international capital flows,which has become an urgent issue for Chinese economy at the new stage.In this context,based on portfolio theory and literatures on international capital flow,the economic logic between household assets allocation and international capital flows is discussed;the current situation of Chinese household is analyzed as well.The data shows that the Chinese household wealth has been rising rapidly,income disparity increased,and asset structure became diversified,financial development and size of wealth has become one of important influential factors for household domestic asset allocation.At same time,Chinese households have strong desire for overseas investment,and the overseas investment features the trend of diversified and large-scale.The diversified domestic and overseas asset allocation behavior has indirect and direct impact on international capital flows,which became an important momentum of capital outflows in China at present.Based on above stylized facts,we study the affecting factors of the Chinese households' domestic and overseas asset allocation,and five empirical models are established to discuss the impacts of household asset allocation on international capital flows.Firstly,in order to solve endogenous problem,?Probit and ?Tobit models are applied to explore how financial development influence different style household asset allocation in different regions.The empirical result shows that the better financial development will increase the probability of household risk asset investment and proportion of holding risk asset,and its marginal effect on central and western regions household is bigger than eastern region.The cross-section threshold empirical study shows:the wealth size has significant threshold effect on different style household asset allocation in different regions;the increasing household wealth will increase the probability of household risk asset investment and proportion of holding risk asset;the wealth threshold value for eastern region household is higher than central and western regions;and the marginal effect on eastern region household is bigger than central and western regions.Therefore,the financial development and household wealth are the most important affecting factors for household domestic asset allocation.Besides,rise of household income,share of non-rurual household registration,increasing share of young and middle-aged population,increase of education level cause positive effect on the probability of household risk asset investment and share of holding risk asset,but rise of risk aversion has negative effect,and household housing asset investment has crowding-out effect for total risk asset allocation.Secondly,we overcome the difficulty of data availability,macro and micro official data of household overseas asset allocation are not available,we consulted the staff in State Administration of Foreign Exchange and commercial bank many times,then we estimated the household overseas asset allocation scale reasonably,and study the threshold effect of wealth size on household overseas asset allocation.The empirical study shows that wealth per capita has significant threshold effect on household overseas asset allocation.When GDP per capita exceeds 3600 U.S.dollars,the increasing per capita wealth will improve household overseas asset allocation.Besides,relaxing capital controls and improving financial development will increase household overseas asset allocation,but improvement of property rights protection and RMB appreciation will reduce household overseas investment.Finally,this paper analyzes the indirect effect of household domestic asset allocation on international capital flows by applying Mediation Effect Test model.The empirical study shows that Chinese household invest most asset at home,and the lion's share of risk asset is property and equity,which will affect international flows through real estate market and stock markets fluctuation as mediators,especially for short-term international capital flows.There are strict foreign exchange controls on stock market in China,that is why the real estate market fluctuation has bigger marginal effect on short-term international capital flows.This paper studies the affecting factors which influence international capital flows as ledger accounts by VAR model,and there are significant differences among different types of international capital flows,the increasing household overseas asset allocation desire has becoming one of important affecting factors for capital outflows.In contrast with household overseas asset allocation desire under capital controls,the potential overseas asset allocation desire will influence international capital flows deeply.The study shows wealth size,openness degree,real estate market yield,property rights protection,exchange rate and interest rate spread have different effects on direct investment,portfolio investment and other investment,and the reasons for these features is discussed.To conclude,Chinese household asset structure become diversified,which has become one of the important agents affecting international capital flows.The main factors influencing household domestic asset allocation are financial development,wealth size and household individual characteristics and so on,sound financial development will benefit household asset structure optimization,improve asset return and promote financial stability.Against the background of economic globalization and capital account liberalization in China,the desire of household overseas asset allocation is increasing,and the wealth size shows significant threshold effect for household overseas asset allocation.Capital controls,financial development,property rights protection and asset returns differential between domestic and overseas asset will influence household overseas investment strategy.The household domestic asset allocation and overseas asset allocation will cause indirect and direct influence on international capital flows,which will become one of important approaches of international capital flows.If the demand for global asset allocation were not satisfied,household assets may rush to the stock market and the real estate market aiming at assets accretion,and may lead to capital market bubbles,it will hurt capital market stability,and it also may cause capital flights,and bring negative impact on economic development and financial stability.At present,Chinese financial development is at low stage,investment tools are not sufficient,property rights protection system need to be completed.The administrative measures are playing major role in managing household overseas asset allocation,price and other market-oriented measures are limited,and these institutional framework restrict household diversified investment.In order to satisfy the diversified asset allocation demand,the Chinese government should create mechanism for protecting household investment rights,fully satisfy the willingness of investment,deepen financial reform,enrich investment tools in domestic financial markets,perfect financial services,complete the system of property protection and improve the security of domestic assets;The household asset overseas allocation should be guided,and the central bank need promote the interest rate and exchange rate marketization,liberalize the capital account steadily and prudently,build up the framework of macro and micro-prudential management for international capital flows,enhance the effectiveness of supervision,avoid the regional and systemic financial risks and then promote sustainable economic development. |
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