Study Of Influence Of The U.S.quantitative Easing Monetary Policy On The Trade And Direct Investment Effect Between China And U.S.A

Since the financial crisis in 2008,until 2013 the Fed launched four rounds quantitative easing monetary policy(QE), there is a strong impact on the global economy and China’s economic and financial.Under the influence of the Fed’s quantitative easing monetary policy, the US economy gradually bottomed out, appearing significant signs of recovery, the economic indicators are achieved the desired target,so the Fed in January 2014 launched the QE exiting program, it will also impact our economy.I selected the angle of Sino-US trade and direct investment to study the effects of the implementation and out of the US quantitative easing monetary policy to Sino-US trade and investment.First of all,reviewed the development of Sino-US economic and trade relations, and use the M-F model to analysis the influence of quantitative easing monetary policy to Sino-US trade and investment path, through the establishment of the VAR model,study the influence of United States quantitative easing monetary policy to Sino-US trade and investment,the conclusion as following:(1)The QE policy impact on Sino-US trade.The QE policy will affect China-Us trade level through income effect and exchange rate effect, the income effect will through the GDP to pull the recovery of China’s exports to the United States, and the effect of exchange rate played inhibition on China’s exports to the United States, finally the impact direction of the QE policy on Sino-US trade depends on the size of these two kinds’ effect of comparison. In the short term(1-4), the income effect is bigger than the exchange rate effect,the QE policy in the short term will drive the recovery of Chinese exports trade to the United States. In the medium to long term(5-21), the income effect is less than the exchange rate effect, the QE policy in the long run will inhibit the growth of China’s net exports to the United States;(2)The QE policy impact on Chinese direct investment in the United State.The QE policy mainly through income channels, exchange rates and interest rates affect the scale of Chinese direct investment in the United States. Among them, Chinese GDP growth effectively promoted China’s direct investment to the United States; The appreciation of the yuan will be through the wealth effect to enhance purchasing power of our country in the United States, accelerated the pace of mergers and acquisitions;But the role of interest rate contrary to expectations, the reason is our country’s policy, with the marketization of interest rate and the easing of capital controls, the direction will change too. In light of the above three kinds of effects, the direct investment scale in the United States got rapid development during the implementation of quantitative easing monetary policy;(3)The QE policy influence on American direct investment in China.The Fed’s QE policy has not obvious positive promoting effect on US direct investment in China, while the U.S. economic recovery promoted the American direct investment in China, but the value of the dollar is not good for US to carry out foreign direct investment;(4)The QE policy impact on China’s trade. The U.S. quantitative easing monetary policy exit, in the short term through exchange rate(1-12) can significantly promote the increase of China’s net exports to the United States; In the long run(13-39), model prediction shows that on the premise of other conditions unchanged, as the U.S. quantitative easing monetary policy exit, Chinese net exports to the United States will tend to stable development in long term;(5) The QE policy impact on Chinese direct investment in the United States.The Fed started QE exit program, through the exchange rate channels to reduce the scale of China’s direct investment in the United States, but at the same time, Chinese GDP growth is still a factor of US direct investment in China, so after QE exit, the size of Chinese direct investment to the United States depends on the role of the above two kinds of synthesis.As a result, in the economic globalization, in order to realize the sustainable development of Chinese trade and investment to the United States, I suggest our country do as followings: Firstly, actively promote the reform of RMB exchange rate mechanism, improve the flexibility of microeconomic subject response to market changes; Secondly, accelerate the upgrading of industrial structure and encourage product innovation, improve the products’ international competitiveness; Thirdly, improve the strength of the multinational companies in our country, expand the scale of transnational investment; Fourthly, strengthen the temporary capital controls to resist the potential risk of international financial markets. Fifthly, use the QE tools to stimulate our economy and promote the steady development of China-US economic and trade relations.