China’s Internal-External Equilirium Policy Coordination During The Transformation Period

China’s economy had leap development since the reform of market economy in the late1970s, now it is already the world’s second largest economy. But with the development of market economy reform, the deep contradiction in the economic operation is also increasingly highlighted.Previous studies lack of comprehensive quantitative assessment of China’s economic growth balance problem. Three-gap model is a useful tool for analysis of economic equilibrium, especially for developing countries. In this paper, we dynamic analysis of the China’s economic development path, with modified three-gap model which is more suitable for China. Research shows that the root of current economic imbalances is from fiscal constraints, foreign constraints, saving constraints. To realize economic balanced growth, China needs a comprehensive policy collocation scheme.The possible innovation of this article is the methods of research:gaps in triangle area was firstly introduced as analysis tool in three-gap model, besides, we upgraded the method of evaluation of potential output,such as a more suitable HP filter smoothing parameter was chosen.