Empirical Study On The Influence Factors Of China's Current Account Surplus

Keeping huge surplus in current account has been the main characteristic of balance of payment in China currently. China's current account has been holding huge surplus since 1994, the size of surplus from 69.08 hundred million dollars in 1994 rise to 2498.65 hundred million dollars in 2006. Judging from the structure, trade in goods led the trend of the current surplus is the major source of services trade deficit of the past 10 years; Service trade deficit mainly to the past 10 years; income account shortfall mainly to a deficit, the lest three years, to have a surplus and numerical increase;current transfers account sustained surplus. The exiting of huge current account surplus in China has not only increase complexity and difficulty on macroscopic readjustment and control, and increase pressure of RMB and trade friction,go against the mode changing of economic growth and the course of structural readjustment, and has brought negative effect to China's economic development. The leading theory to explain this phenomenon is divided into four main faction They are: theory of RMB exchange underevaluation, theory of orientation of international division of labor, two-gap theory and global imbalance theory. In this paper, the four main theories were Summarized and review, compared their explaining abilities to the status of the project. Based on China's data, I apply of these theories constructed empirical models - VAR model to explore these theories explanation for the actual situation, and find that: the current imbalance in China is a part of global imbalance, only through the strengthening of international policy coordination, can we effectively address the issue of China's trade imbalance. So I suggest that: strengthening of international cooperation is the key, we should pay more attention on import, continue to develop processing trade, to achieve the transformation and upgrading of the processing trade, adjust export-oriented strategy, rational use of foreign capital, enhance the Chinese companies ability to go out, accelerate reform of the RMB exchange rate formation mechanism, expand domestic demand and spur domestic consumption. China's economy will be sustainable, healthy and stable development in Internal and external balance.