The Estimation Of Capital Flight And Analysis Of Impact Factors

As the hidden and illegal capital outflow, capital flight is the key factor to trigger financial crisis and one of the main index of Early Warning System. Measuring the scale of capital flight reasonably and scientifically is the effective mean of capital control and a main part of the financial crisis Early Warning System. The article discusses the measure methods of capital flight and affecting factors based on the special situation of China from a planned economy to a market economy.At first, definition of capital flight is modified based on the status of China and IMF research papers. The statistics data between China and twenty-night trade partners is used to measure misinvoicing. Modified with the trade credits in BOP and the trade misinvoicing out of BOP, methods of Cuddington and World Bank are employed to estimate the short-term and total capital flight from China respectively from 1982 to 2005, where trade misinvoicing is adjusted with the transit trade via Hong Kong. Based on the estimation, according to the fact and referencing to the overseas and domestic research, Correlation, Granger testing, unit root testing and cointegrated method are used to analyze the impact factors of capital flight from China.Two main conclusion are concluded by the the measure results. First, there is a large scale of capital flight from China under serious capital control, and the capital flight per unit GDP can trigger financial crisis adequately. Second, hidden specultive capital is flowing into China under the situation of large scale of capital flight, and inflow of illegal arbitrage capital covers severity of capital flight from China. The econometrical analysis results show that gross fixed capital formation, domestic debt, trade, overrate of RMB, unemployment rate, M2, micro-tax and nominal interest rate are the main factors influncing capital flight. The former five factors trigger capital flight and the other three factors plan restraining role. In addition, there are some un-quantized factors triggering capital flight from China. Finally, the detailed suggestions are put forward to prevent capital flight based of the analysis of factors.