China's International Payments Surplus Causes, Effects, And Its Adjustment

China' s Balance of Payments have experienced "Double Surplus"——Current Account Surplus and Capital and Financial Account Surplus for 14 years since 1994. After the beginning of the new century, double surplus and foreign exchange both increase quickly.China' s Double Surplus is formed by the combination of varied reasons. Structural cause, monetary cause and policy cause are all related to its fast accumulation.In the process of China' s development, Double Surplus has been promoting employment and economic growth. However, with the change of the domestic and foreign economic circumstances, Double Surplus is now bringing China more and more trouble. Trade conflicts, revaluation pressure of RMB, high inflation rate, high cost of monetary policy, disequilibrium between domestic enterprises and foreign enterprises, potential threat of "hot money" , great loss of the value of China' s foreign exchange can all harm China' s economic and financial stability.In the long run, such Balance of Payments structure is unsustainable, because it would cost both China' s development quality and people' s welfare.Varied policies should be put together in order to adjust our present Balance of Payments. We can increase the flexibility of exchange rate, implement tighter monetary policy, change development strategy, promote industry structure, stimulate domestic demand, improve financial markets, and optimize the management of foreign reserves. The adjustment of Balance of Payments maybe takes a long time. In the long term, in fact, the economic structure and the development stage really determine the condition of Balance of Payments.