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

China’s economy sustained rapid development over30years since reform and opening, now it is already the world’s second largest economy. But with the market economy reforms, economic operation of the deep-seated contradictions has become increasingly prominent. Economic transformation is upgrading imminent. In recent years, China’s economy has accumulated domestic savings surplus, double surplus and the foreign exchange reserves.This paper based on China’s macroeconomic data from1992to2011years, combined it with the measured capacity utilization rate with three-gap model which is accord with China’economy, analyzes the economic work according to the model on China’s economic situation in1992-2011. The results showed that China’s internal and external imbalances are comprehensivly constrained by financial constraints, saving constraints and foreign exchange constraints. According to the size comparison of correlation coefficients between the capacity utilization rate and each bound variable. It shows that fiscal restraint is the biggest constraints to economic growth, second constraint is the savings constraint, last one is the foreign trade constraints. Among them, the main aspect of fiscal restraint is that the scale of growth in government savings increases too fast. As a result the scale of government invenst is smaller than government savings. Foreign trade constraints mainly include the excessive growth of intermediate goods imports, capital goods imports are too few and slow growth, as well as foreign trade surplus is too large. The volatility of foreign savings is high and it grows slow According to the root of my empirical analysis of domestic and international imbalances, this paper puts forword a series of targeted policy for suggestions and countermeasures.The innovation of this article may be as follows:it uses two different levels of complexity of a comparative analysis of the production function to estimate the capacity utilization. Compared to the general calculation method, it seems more targeted. Meanwhile in the analysis of macroeconomic equilibrium, it uses a triangle as a variable gap analysis tool which is simple and vivid.