Analysis On Factors Influencing Current Account Surplus In Chinese Balance Of Payment

In the last few years, the global current account unbalance has become the prominent problems in the world economic. On the one hand, the current account of some developed countries, represented by the United States, has been in huge deficit for a long time; on the other hand, there is a sharp rise in the current account of several emerging developing countries, especially of China. And the serious imbalance of current account has more and more adverse effects on China's economy. At the same time, there is a slowdown in world economic growth and a global financial crisis. All of these will increase external risks to the economic development of China.With the deepening of reform and opening up, especially after the accession to WTO, China's economic opening degree significantly increased. Coupled with the relaxation of exchange controls in China, and capital and financial transactions about Renminbi became gradually convertible. At the same time, the uncertainty of Chinese current account is growing, which made the controllability of Chinese economy to external equilibration weaker. The grim reality compels us to do a comprehensive and systematic analysis of determinants of the changes to current account balance in China so that we can formulate suitable macro-economic policies on adjusting current account balance.In this paper, theoretical and practical methods have been introduced to analyze the issue of what caused current account surplus in China. And we used related knowledge and theories of economics to explain this phenomenon. Then put forward strategies and suggestions to modify China current account surplus.Firstly, illustrated the background and significance of the study, and an introduction of the researches about this Problem has been outlined from home and abroad. Secondly, in chapter 2, analyzed the process of current account (1982-2009) and four specific items (1997-2009). Because of the significance of Goods and Services in the current account, the author esteemed them as the major part. The chapter 3 analyzed four factors affecting the current account surplus, that is trade surplus, investment-savings, direct investment, RMB exchange rate. Chapter 4 is the demonstration process. In the light of ADF unit root test and cointegration technique, the author uses Chinese macroeconomic data from 1982-2009 to establish model. The conclusions are:in the long run,there were co-integration among trade surplus,investment-savings,direct investment and current account; Trade surplus and direct investment would cause the short-term changes of current account in the Error Correction Model. And RMB exchange rate were not suitable with this model, so the relation between RMB exchange rate and current account surplus could not be judged.Chapter 5 introduced international experience to adjust the balance of payment, such as Japan,Singapore and Germany, in order to provide any help and support for balance of payment adjustment. According to the above assay, the author posed some suggestions from three aspects. First, proposed the direction of policy adjustment, that is to ensure the steady development of the current account balance so the government should continue to enforce macro control. Second, readjust foreign trade policy. The author suggested to further encourage and expand imports, promote trade balance, and to keep stable exchange rate in the initiative, controllability and gradual way. Three is our domestic policy adjustment, which included reducing the savings rate and improving the utilization of foreign investment policy.The innovations of this paper are strong objectiveness and Multi-angle analysis. At the same time, the strategies raised according to the current international and domestic situation have great practical significance. Due to space limitations and author's ability, the paper has any insufficiency. It only considers the four factors, which is not comprehensive enough. In addition the design of model may not be perfect and the date in the model are mainly from the open country's macroeconomic statistics, which made the model rougher.