Study On The Excess Liquidity In China

From year 2005, excess liquidity has become a key word to describe the economic situation of China. Although China has made many efforts to curb excess liquidity, the result is not optimistic. There is still excess liquidity in our economic system, which give much pressure on our economic development. Premier Wen jiabao in his Report on the Work of the Government 2008 pointed out: "the strong possibility of resurgence in fixed asset investment, continued excessive supplies of money and credit, the still-unsolved problem of excess liquidity, and considerable inflationary pressure. For these reasons, we must improve financial regulation to control the excessively rapid growth in the supplies of money and credit." It means that the complexion of excess liquidity have not been changed essentially. So how to look into the situation reasonably and find out where the problem is and how to deal with it is a top question for China to answer.This paper first summarizes the study on the excess liquidity of China. Based on the current studies, chose my point to analyze the issue of the excess liquidity in China. State the current situation of China's excessive liquidity and its impacts on the economy of China. Find out how the excessive liquidity comes and the dominant factor of the excessive liquidity of China. Then analyze the tools used to fight the excessive liquidity, give some new ideas on dealing with excessive liquidity of China.This paper has five chapters. Chapter 1 is introduction. It gives a literature review which is about the recent scholarly research on the problem of excess liquidity. And chapter 2 is on the current situation of China's excessive liquidity. Chapter 3 explains the negative effects of the excess liquidity in China. Chapter 4 finds the reasons for the problem of excess liquidity in China's economic. Chapter 5 gives the methods to deal with the excess liquidity of China.Generally speaking, the merits of the paper lie in: using the latest data; it helps to grasp the current situation of excess liquidity. And point out that the external impact is the dominant factor of the excessive liquidity of China. Unfortunately, there is no econometric model to explain the issue in the paper because the writer lack of ability.