The Study Of China’s Financial Security Problems Under International Capital Flows

These years, international capital increases on a large scale and at an alarming rate. What’s more, it develops an increasingly close relationship with financial crisis. Many financial crises occurred after1980s have a close relationship with international capital flows. International capital flows become an important external driver which speed up the occurrence of financial crisis. With the continuous improvement of our financial and economic opening degree, the amount of international capital flows into China is increasing. The international capital flows into China promotes our country’s economy. While, at the same time, it brings a lot of potential risks. Based on the above background, this paper presents a study of China’s financial security issues in the context of international capital flows.According to the theories and models of economics, finance and metrology and the research findings of others, this paper makes a study on the international capital flow and financial security issues in China. The study is performed based on a large amount of data which are Consistent with our nation’s actual situation. The main research contents of this paper include four parts. The first part is to understand the linkage mechanism between the international capital flows and financial crises. The second part is analyzing the situation of international capital flows in China. The third part is to estimate the degree of China’s financial security. In this part, qualitative and quantitative judgment towards our country’s financial security conditions are brought forward. At last, countermeasures and suggestions are put forward to maintain our nation’s financial stability.The structure of this paper:Part1:Propose the the meaning and background of this study. Based on related theories and models, this part analyze the linkage mechanism between the international capital flows and financial crises. Analysis of the relationship between the financial crises in Latin America and Southeast Asia and international capital flows are made. Large scale of external liabilities, securities investment in the stock market and international speculative factors are important factors that lead to the occurrence of financial crisis.Part2:This section describes the inflow of international capital in China. The net capital inflow, the structure of the capital inflow and the domestic scale of hot money are described in detail based on a large scale of data.Part3:The degree of domestic financial security is analyzed and estimated in this part. An overall judgment towards China’s financial security situation is given throught constructing the forewarning index system of international capital flows. Then the probability of occurrence of financial crisis in China is calculated according to the binary choice Probit model and a quantitative calculation of China’s financial security situation is drawn.Part4:On the base of previous study and findings, Countermeasures to maintain financial stability is put forward in the context of international capital flows.