The Excessive Money Issue On The Background Of China's System Transition

From 1978 until now, China's step-by-step reform in the economic and financial field has passed through more than 20 years'time, the entire economical financial domain had a series of tremendous changes, China operational mechanism of economy has realized gradually by the planned economy to the socialized market economy in radical transformation. However, followed by the unceasing advancement of economic system, in the process of macro economy in China, a puzzling phenomenon has appeared.This phenomenon is expressed mainly on the macro economy's three most important variables namely economic growth rates, the money supply and in inflation rate's relations, fast increase of excessive money dose not cause high rise of price level. At the same time, since the 1990s, hypothesized economy such as the stock, the real estate has been able to develop fast, two kind of economic form such as the entity economy and the hypothesized economy as well as their interaction constituted the modern economic system's new pattern. Therefore, why do the excessive money issue and the hypothesized economy's sudden appearance synchronize on Chinese this land? What relations and the mutual influence do they have? Can actually the excessive money cause the inflation? These are some questions which this article is going to inquire into.Under the background of Chinese economical system switch, this article first obtains to the excessive money's elaboration from the virtual economic development background, briefly introduces virtual economy's basic concept and the intrinsic relations between virtual economy and the real economy, then reviews China's virtual economic development process since the 1990s. Then it draws out the concept of excessive money, carries on the review excessive money which attracts fierce debate in the academic circle. Because present western economy's classical theories have met very big obstacle in the explanation of real economic phenomenon, therefore this article has elaborated revision of tradition monetary operation equation after adding the factor of virtual economy to be as the theory basis of excessive money. Then it carries on the economic discussion over excessive money phenomenon in China. On one side from M2/GDP(which is called monetization ratio and financial deepening rate) angle, analyzes the reason why it is very high above the normal and its relations between excessive money, on the other side makes elaboration over whether excessive money can exist. Next on the theory diagnosis part, does some analysis among the money supply's rate, a share volume of business change and inflation rate. Using the VEC model and the impulse response function and the Granger causes and effects examination to do empirical study, finally draws the conclusion, proposes the related policies and the suggestions.