The Remittance

In recent decades remittances have become an important source of income formany developing countries. For many developing economies, remittances constitutethe single largest source of foreign exchange, exceeding export revenues, FDI, andother private capital inflows. The Growing workers' remittances, has received moreattention. However, the research of workers' remittances based on China remainsblank.In this paper, we study the role of macroeconomic variables on remittances flows toChina. The paper is structured as follows. In the first section, we introduce the flowsof remittances.Section 2 is the review of literature on the determinants of remittances. Theliterature treats the determinants of workers' remittances in two main categories. Thefirst category concerns the microeconomic characteristics remittances. The secondcategory of determinants, on the other hand, considers macroeconomic and politicalvariables. Beside, we also review the literature on the determinants of remittancesflows to India, Pakistan and Turkey.In section three, we study the role of macroeconomic variables on remittancesflows to China. Using data for the 1982-2003 periods, our empirical analysis suggeststhat the macroeconomic variables have not significantly affected remittance flows toChina. However, Using data for the 1994-2003 period, the empirical results showthat the RMB exchange rate, the degree of capital account openness have significantlyaffected remittance flows in China. Therefore, we put forward the "SpeculateHypothesis" based on the study of remittances flows to China.In section four, we analyze the relationship of remittances flows to China andcapital flow vulnerability. We believe that the remittances flows to China enhancedthe capital flow vulnerability based on the empirical study in section three. In order toreduce the damage of remittances posed, we put forward the corresponding policies.