Analysis Of China's International Payments Imbalances In The Global Economy

In 2005, the international monetary fund (IMF) proposed the concept of"global imbalances". In recent years, the global imbalances had aroused wide attention of both the domestic and international scholars. Global imbalance is that one country has a huge trade deficit while trade surplus corresponding to such trade deficit is founded in other countries. At the present, the Sino-US trade imbalances mainly contributed to the global imbalances. After China's reform and opening-up, especially entry into the WTO, China's economy is deeply linked with the world economy. There is also a difficult situation for Chinese economy under the global imbalances. The imbalance in international payments of China represents as the continuous expansion of "double surpluses", which result in the rapid increase of foreign exchange reserve and negative effect for Chinese economic stability and sustainable development, including the rise in trade frictions with the trade partner countries and China's foreign exchange reserves. Although foreign exchange reserves can play a vital role in the Chinese economy's ability to withstand external risks, it also increases the devaluation of reserve currency and waste of resources, and then influence the implement of the China's monetary policy. The problem of the improvement of China's international trade imbalances under the background of global imbalances has become a problem to the solved urgently for Chinese scholars.The thesis analyzed the root of the global imbalances and status of the imbalance in international payments of China, using some built models form the mechanism of international payments imbalances. Based on these, the policy suggestions to adjust China's vast surplus of balance of payments were proposed as follow: first, adjust the export structure; second, hold steady of the exchange rate of RMB & USD; third, improve the structure of foreign reserves; fourth, build the domestic demand-led growth of economy.