Analysis Of Influencing Factors On Capital Flight In P.R.China

Foreign capital used by China was almost USD430 billions during the year of 1979-2001, and China had become the second largest country of directly absorbing foreign investment which is just behind the United States. However, some phenomenon appeared since the later stage of 80's such as the decreasing of settlement of exchange, the increasing of sales of exchange and the extreme limitation of foreign exchange reserve, though our country maintain a larger surplus in trade and capital project. It inevitably made us associate with South America in the same term. In the period of some Latin American counties such as Argentina, Mexico, Venezuela and so on were up to their ear in debt , and the short of exchange severely blocked the development of economy. Economist analyzed the reasons and found that when the foreign debt increased in the public department of these countries, a large quantity of private capital drained continually. With the development of economy, serious circumstance of capital flight appeared in China. This made our country becomes the forth largest country of capital flight in the world just behind Argentina, Mexico and Venezuela.This article probed into the main effect elements of capital flight by analyzing the associate date from 1991 to 2000, combining the characteristic of economic development of the 10 years and by regression analysis and divisor revolve. We think that capital flight could divided into two parts in the respect of intention :one part is to pursue high profits which mainly consider the difference of interest rates, exchange rates and tax policies between our country and abroad. This part of capital flight will vanish if there is no difference. The other part of capital flight was to guarantee the value of capital and property. This part of capital flight didn't consider the difference of tax policies between our country and foreign country's, while this part must acquire legality capacity firstly in foreign countries; just then consider the problem of further investment. This further investment may perhaps invest into China once more, and may disappear in the foreign countries forever. This part of capital flight was caused by the loss of state-owned capital and property, which was the result of various unlawful practice such as embezzlement, bribe acceptance and so on. I will consider both the two situations. About the research method, we mainly use the Macroeconomics, Banking and Amount economics and others to make the theory and substantial evidence analysis for the first part. To the second part, all the macroeconomic theory analysis and date substantial evidence became powerless if capital was just aim to guarantee value only. Because the prerequisite of economic research is only to pursue profit maximize and research will become with no sense if the prerequisite is vanished. We can only use the theory of games to simply describe the psychology state of capital flight without date and applicable theory. ?We estimate that capital flight is caused mainly by the second intention, that is to say, we should consider the value guarantee about the capital flight firstly, and then consider appriciation. Thus, I think that we can not reveal the basic reasons of capital flight if we only consider some indexes we usually use in economics like interest rate, exchange rate and so on, while we should investigate from the respect of the origin of capital flight, the grey and black revenue is main source. We should block up the leak and strengthen monitoring and guard from the respect of legislate and so on, if we want to relieve the boring problem.