The Discussion Of Excess Liquidity In China's Economic Operation

In the past 2006, the problem of excess liquidity is still a prominent issue in China's economic. In 2003,the People's Bank of China began using a combination of monetary policy tools to control excess liquidity. And in 2006, the report of People's Bank of China said, the management of liquidity was still the main issue. China is still under the pressure of international balance of payments surplus. Under this background, the purpose of this paper is to analyze the excess liquidity in the economic.First, the paper indicates the background of excess liquidity and its great realistic significance to China's economic. Then it gives a literature review which is about the recent scholarly research on the problem of excess liquidity. The writing idea is like this: on the basis of the concept of liquidity and excess liquidity, the paper gives a detailed analysis of the problem of excess liquidity from a macro perspective. At last, the paper provides some comments and suggestions to solve the problem of excess liquidity.The paper is divided into five chapters:In the first chapter, the concept of liquidity and excess liquidity are introduced. It is the base for deep study the problem of excess liquidity in China's economic. This chapter is divided into three parts: the first part is about the concept of excess liquidity. The second and third part is about the problem of the excess liquidity in China and other countries.In the second chapter, the manifestation of the problem of excess liquidity is analyses by forms and graphics, and it is the foundation to further analyze the impact of the excess liquidity. This chapter has four parts: The first part points that excess money supply is a sign of excess liquidity. The second part points that the widening gap between the growth of M2 and M1 is one aspect of the problem of excess liquidity. The third part suggests that the gap between deposit and loan in financial institutions is a performance of liquidity excess. The last part thinks that the excess liquidity in the financial institutions which is deposited in the People's Bank of China is another manifestation of the excess liquidity.The third chapter explains the negative effects of the excess liquidity in China. This chapter is divided into three parts: The first part reveals that the excess liquidity makes our economic overheating, and may ultimately lead to inflation. The second part thinks that the problem of excess liquidity impacts China's monetary policy. The third part of the chapter is about its effect to the financial institutions in China.The fourth chapter gives the reasons for the problem of excess liquidity in China's economic. There are five reasons: The induction of global economic imbalances, the rapid growth of foreign exchange reserve, the imbalance of China's economic structure and regional development, the smooth growth of savings can not turn into investment, the change of the speed of currency circulation.The fifth chapter point out that macro-control is the best way to solve the excess liquidity in the currency markets.Generally speaking, the merits of the paper lie in:1, The current research papers on the excess liquidity is still only in the banking system and monetary system, but this paper considers the problem on the overall macroeconomic level.2, The study of this paper is mainly based on the latest data, therefore, it has strong convincing.3, This paper gives the literature reviewed on the latest research on excess liquidity. This is not only benefiting to the smooth completion of this paper, but also gives the necessary preparations for the deep study on excess liquidity.