Analysis On The Inner Reason Of Chinese Trade Surplus From The Perspective Of Matching Of Savings And Capital Formation

With the deepening of economic globalization, China’s foreign trade has developed rapidly. For the past few years, China’s trade surplus has continually expanded, at the same time, China’s trade imbalance has persistently deepened, which has become an important part of global imbalances. China’s trade surplus once had a positive impact to China’s economic development, but with the continual accumulation of surplus and the huge growth of foreign exchange reserves, the associatively negative effects are emerging. In this paper, the author studies the inner reason of china’s trade surplus from the perspective of Savings-Capital Formation through a detailed analysis on the impact of difference between savings and capital formation on china’s trade imbalance, then gives an empirical analysis of the relationship between Savings-Capital Formation and china’s trade surplus. At the last, the author puts forward policy suggestions for promoting the balanced development of china’s trade.In this paper, qualitative analysis and quantitative analysis, theory and empirical analysis are used. Firstly, the author elaborates the current situation, influence and causes of china’s trade surplus; secondly, he introduces the Savings-Capital Formation theories and makes quantitative analysis on the status of savings and capital formation in our country; then he applies the theory to construct analytical framework of the impact of difference of Savings-Capital Formation on china’s trade imbalance. After deduction and analysis, a conclusion is drawn, that is, the reason of china’s trade surplus is funding mismatch, which results from differences between savings and capital formation. And funding mismatch leads to the traditional industry overcapacity, which causes china’s trade imbalance. Finally, there are two factors, difference between savings and capital formation and china’s trade surplus, and the author makes an empirical research on the relationship between the two factors above from 1985 to 2012, and the result shows that differences between savings and capital formation have significantly positive correlation with china’s trade surplus.Through theoretical analysis and empirical test, we get the following conclusion: the separation between the main body of savings and investment in China causes investment mismatch of savings among industrial sectors, so that gives rise to the traditional manufacturing industry overcapacity and oversupply of products. On the one hand, due to oversupply of products, the related products in china’s trade has a comparative advantage, on the other hand, the dependence on foreign trade export enterprises substantially increases because of weak domestic demand. These two factors intensify china’s trade imbalance and china’s trade surplus increases year by year. Based on the inner cause of china’s trade surplus, the author proposes reducing the high savings rate, increasing income levels, improving the allocation mechanism, developing multi-level financial markets and promoting securitization and interest rate liberalization and other relevant policy suggestions to continuously improve the conversion efficiency the Savings-Capital Formation and alleviate the continually increasing china’s trade surplus.