The Inflow Of Foreign Capital And Domestic And International Economic Equilibrium Problem Study

During the 30 years of reform and opening-up, foreign capital has played a very positive role in China's economic development, and has become an important component of China's economy. However, the use of foreign capital brings a lot of positive impact to China's economy, which is also one of the most important factors of the economical imbalance. As the performance of the economic imbalances become increasingly prominent. The domestic and foreign researchers launched an unprecedented discussion on ways to utilize foreign capital and whether the use of appropriate policies, and a lot of theoretical results appear. It is against this background that I draw on the literature on the relationship between foreign capital inflow and internal and external economic balance.This paper firstly describes the current situation of China's use of foreign investment, and analyzed objectively the positive and negative roles of the foreign capital to the domestic and external economic development. Followed by a detailed impact of the inflow of foreign capital to China's international balance of payments transactions, including the impact on the capital and financial account, on the current account, on the foreign exchange reserves and the overall impact on the international balance of payments. In this part, I give a detailed analysis of the "double surplus", the foreign exchange reserves, external debt and other popular problem. On this basis, I defined the concept of domestic economic imbalances and analyzed the specific performance of the domestic economic imbalances and policy reasons, focusing on the domestic economy, foreign investment policy, foreign trade policy, and foreign exchange management policy. Finally, in the core of this paper, I suggested the proposed measures to those problems involved above. The government should speed up financial reforms to transit large domestic savings into investment and consumption, change the structure of financial expenditure and increase financial expenditures due to lower government savings. Then it should change foreign investment, foreign trade and foreign exchange management policies. Finally, it should be the article point to speed up the reform of the exchange rate.The paper put the foreign capital inflow and internal and external economic balance together, which is a forefront study. Particularly, The proposals, including solving insufficient domestic demand and the adjustment of foreign investment and trade policies, as the main measures to solve the internal and external economic imbalances are relatively systematical and comprehensive summarizes of the theory in this field. On the basis of research results, in light of theory and practical experience from modern economic development, this paper has a very strong reference value to solve the practical problems of the Chinese economy to achieve a balanced and sustainable economic development.