Influence Of Short-term Capital On Economy Of A Country And Countermeasure

With the process of world economic globalization, the growth of short-term capital is astonishing. Several financial crisis after 1990's was connected tightly with short-term capital flow. And the characteristics of short-term capital could take a great impact on the stability of economy. On the other hand, the great impact and attack of short-term capital is connected with the fragile macroeconomic condition. The more fragile a country's macroeconomic condition is, the more impact and attack will cause.There is some similar points and some differences between china and Southeast Asian's macroeconomic conditions and short-term capital inflow. In the assay, we will discuss influences between short-term capital inflow and macroeconomic conditions in this two similar-and-difference economy. The similar points are China and those Asian countries depend too much on the export; The amount of short-term capital inflow is huge; asset bubbles and face similar outer economic circumstance. The differences are: before crisis, Southeast Asian countries have their macroeconomic condition in bad situation: export and current account condition deteriorated; the gap between investment and saving is obvious etc; China's macroeconomic condition is not so bad, but it faces: saving ratio is too high, domestic consumption too low;"double surplus"and exchange reserve excess. Although these two kind of economy have different situation, but they all face the same question: the impact of short-term capital inflow. Just because of the macroeconomic condition imbalance, the impact of short-term capital inflow is financial crisis. China's condition is much better, but the impact of short-term capital inflow on economic is also obvious now: the pressure of exchange rate; excess liquidity; asset bubbles and inefficiency of macroeconomic control.Analyze the short-term capital inflow and macroeconomic condition of China and Asian Country could give us another view of potential financial risk of China. And last chart gives some advice and suggestion on the problem including: balance the economic growth, use URR policy etc.