External Balance Of China's Economic Policy System

In an open economy, the aim of macro-control is to realize macro economy internal and external balance, that is to realize internal and external balance simultaneously. Internal balance and external balance of an economy are interactional and independent,the relation between them is not only consistent, but also conflicting. Consistency indicates that internal imbalance will lead to external imbalance, external imbalance will also cause internal imbalance, they both will be transformed into each other, interact with each other. Conflict indicates that external imbalance will be worsening when taking some measures to realize internal balance in some kind of situation, vice versa,with the degree of a country's openness becoming deep, the conflict will be growing.Since the reform and openness, china has got great and remarkable achievements in the economy, but the rapid development of economy is at the cost of external imbalance. Since the reform of the external exchange management system in 1994, there always have been international balance of payments surplus in china, due to the surplus of the current account and capital account, which has lead to the rapid growth of foreign exchange reserves, so the RMB is facing increasing pressure of appreciation, and the external imbalance is worsening. Internal economy is also structural imbalance over a long period of time, expressed as: saving glut, over speed of increase of investment, inadequate consumption, especially the grave deficiency of resident consumption. Although, internal and external imbalance of economy essential to de development of our economy in the early stage of reform and openness, the long period of imbalance of internal and external economy will have a great impact on the long-term and stable development of our national economy, causing great fluctuations in the national economy.First of all, this paper will define the conception of internal balance and external balance of economy, and expound the relationship and the conflict between internal and external balance; secondly this paper will review the internal and external imbalance status of Chinese economy since the reform and openness, and analyze the reason of long-term internal and external imbalance of Chinese economy, through the theoretical and empirical analysis, finding that the root reason of external imbalance is internal imbalance, so this paper will further analyze the reason of internal imbalance of economy. Finally based on the theory of economic policy, this paper will construct a policy system to realize the internal and external balance of Chinese economy, confirm the basic aim of internal and external balance and the approach to coordinate the aim conflicts. Based on the exchange rate policy model of Tinbergen, this paper will put forth a policy instrument collocation which is to achieve short-term internal and external balanced development of china's economy, which provide a whole new study perspective to achieve the aim of internal and external balance of economy. According to the deep reason of internal and external imbalance, this paper will also put forth some policy proposals to achieve long-term balanced development of internal and external economy...