Research On The Influence Of Economy Made By International Short Capital Flow In China

With the deepening of economic globalization and financial innovation, theinternational short-term capital flows have become increasingly frequent; this willimpose a significant impact to capital-importing and capital-exporting countries oneconomic development. In general, on the one hand, the international short-termcapital flows can meet the demand of capital for capital-importing countries, while itcan provide more investment channels for capital-exporting countries, on the otherhand, the effectiveness of macroeconomic policies of capital-importing countries andcapital-exporting countries will be weakened to some extent, also the volatility ofreal estate and securities markets will be exacerbated, then lead to increased risk ofthe entire financial system. With institutionalization, speculation, derivatives andother features under the new situation, while international short-term capital flowsbring economic development opportunities among countries, it also impose a higherdemand on the country’s economic system. The monetary authorities must continueto improve the level of international short-term capital management, maximize theuse of international short-term capital to develop economic.As a developing country with sustained economic growth, the channel, scale andstructure of china’s international short-term capital flows has undergone tremendouschanges in the new economic situation. It causes varying degrees of impact onmacroeconomic stability, financial market, the stability of banking system.International short-term capital flows’ impact on China’s inflation, balance ofpayments, as well as domestic savings and investment rates reflects its main impacton China’s macroeconomic stability mainly; its impact on China’s monetary market,stock market and foreign exchange market reflects its main impact on China’sfinancial market; its impact on our banking system’s credit risk, market risk andliquidity risk level reflect its main impact on China’s.There are several methods to estimate a country’s short-term capital scale,including direct method, indirect method, mixed method, and the actual situation ofChina’s economy should be combined with the direct method and corrected indirectmethod to calculate the scale of China’s international short-term capital. It can beseen from the calculation results, the size of the international short-term capital flowsshowed an upward trend in general, but with fluctuation in1997,2006and2008. In addition, the analysis results of the co-integration relationship between theinternational short-term net capital flows and domestic gross domestic product (GDP)show that the flow of international short-term capital promotes the Chinese economy.To take full advantage of the opportunities brought about by the internationalshort-term capital to China’s economic development, and to prevent the greatestdegree of international current flow risk of short-term capital, China can strengtheninternational short-term capital management from three aspects, including drawexperience from foreign international short-term capital management, strengthentheir own institutional construction and participate in the international regulatorysystem.