About The Research And Analysis Of China's Excess Liquidity

With the door open for 20 years, China has become a eastern dragon with a rapid economy development. However, with the economy fast development, China's economy encounters a series of problems. After the deflation, the economy seems to encounter the inflation, but not the completely inflation. A new economical phenomena comes up which is excess liquidity. The excess liquidity is new phenomena, how to define it, what is the reason and how to solve this problem. A series of problems are needed to be resolved.Regarding these problems, our economists proposed many methods and the Government has launched many strategies. However there seems to be no overall methods and overall definition. In addition, the results of these strategies are not obvious. This article aims to find out a reasonable method to resolve the problem.The first chapter describes the rapid growth of the basic currency M2 of the banking system and assets rapid fluctuation, and then brings up the current situation of the excess liquidity. Based on the above description, the article brings up the importance and value of studying the excess liquidity towards our economy. In the meantime, the article describes the studying methods comparing with domestic and overseas economy and capital market development.The second chapter describes the excess liquidity definitions of the theory and dictionary. Based on these definitions, the article brings up difference scenarios descriptions on the excess liquidity from the study perspective. Afterwards, the article brings up its own definition of excess liquidity which is the rapid growth of M2 in the banking systems. Then, the article studies the domestic and overseas research as a basis. Finally, the article describes the same and difference situations based on the domestic and overseas studies towards the excess liquidity definition. The third chapter studies the reasons for excess liquidity. It firstly describes the basic reasons from the theoretic perspective which includes domestic and overseas reasons, whereas including surplus under trading and capital items and higher saving interest reasons. The article brings up the ultimate reason for excess liquidity-the conflict between the capital currency and capital market development lag under the reformation and civilization process.The forth chapter describes the impact on the economy of excess liquidity. As phenomena, it has positive and negative impacts. The excess liquidity would result in the cash efficiencydescending of the banking system which would affect our banking reform. Also, it would affect the assets value under the over plenty of flowage which would not only result in the economic system crash, but also block the economy development, to the worst, it would cause the society unstable. Based on the fully attention to the negative impact, we need to take advantage of positive impact of excess liquidity. Based on the liquidity plenty, we could develop our capital market, resolving the conflict between the stock market fluctuation and stock issuing. Meanwhile, we could take advantage of liquidity plenty to resolve a series of problem for economical structure transmission.The fifth chapter, there are many studies towards to how to resolve and take advantage of the excess liquidity, whereas the government has issued many policies. Based on the current method, i.g bank saving percentage, increasing the volume of exchange rate, even increasing the interest rate, the article brings up the discussion towards to the excess liquidity. The article states that towards to the excess liquidity, currency capitalization would resolve the excess liquidity without rebound which means taking advantage of capital market especially stock market's expansion and development in order to absorb the excess liquidity.The article starts from the current situation of the liquidity. It describes the original reasons and the resolving methods of the excess liquidity. Based on the current studies, the article brings up the definition of the excess liquidity. Under this definition's instruction, it brings up the ultimate reasons for the conflict between capitalization and currency market lag during the process of reformation and civilization. After deep research and studies, it studies the method for absorbing the excess liquidity through expanding our capital market. It brings up a new definition- currency capitalization which means transmitting the over currency in the banking system into the currency which is required in the development of the companies and economy. This method would absorb the currency and turn it into capital which would slow down the liquidity. In order to fulfill the goal, we need to try out best the develop the capital market especially stock market.