The Phenomenon Of "Excess Money" In China

Since the reform and opening in China for over 30 years, economic system and financial system in China has undergone tremendous changes, economic operation system in Chinese gradually realized the fundamental transformation from planned economy to socialist market economy, the development of the financial system has become more and more mature, more and more perfect However, with the process of economic transition in China steadily, China’s macro economy operation appears contrary to the traditional economic theory phenomenon. This phenomenon is the three most important variables, namely, the money supply, the economic growth rate and the price level, the rapid growth of the money supply exceeds the growth of the price and output. American economist Mackinnon called this phenomenon "China lost", also known as the "excess money". At the same time, with the rapid development of our country’s economy, people’s income and consumption level have been improved obviously, the quality of life has been improved significantly, while the income level of residents in our country has been raised and the gap between the rich and the poor is inevitable. In recent years, the urban-rural income gap continues to expand, and the trend has continued to expand. In 1990 the gap of our country city residents per capita disposable income and income of rural residents is 823.9 yuan, by the end of 2013, the gap widened to 18059.2 yuan At present, China’s "excess money" and urban-rural income gap continue to expand, while income distribution has many aspects, such as income gap can affect the overall consumption level of a country, the savings tendency of residents, the residents’ demand for money and so on, and these are related to the "excess money". The expansion of urban and rural income gap is not the cause of the "excess money" in China, and if so, what is the difference between urban and rural income and the impact of China’s "excess money"? These are questions that this article wants to explore.Under the background of China’s economic transition, this paper firstly introduces the origin of the concept of "excess money", and reviews the theory of the "excess money". On this basis, combined with China’s actual economic situation, summed up the four ways to lead to China’s "excess money" phenomenon. These four ways are:consumption, duality finance structure, savings, virtual economy. This paper begins with the consumption tendency, the theoretical basis of Keynes’s marginal propensity to consume, and the expansion of urban and rural income gap will lead to the reduction of consumer demand, consumer demand will not only inhibit the rise in prices, but also affect the healthy development of China’s economy, while the price level and economic growth and the "excess money" is closely related. As China is a typical duality finance structure, the difference between urban and rural economic development has caused a large number of non formal financial institutions in rural areas at present, the existence of these non formal financial institutions, a lot of money, but not very good to promote the development of rural economy. Next, this paper analyzes the growth of the residents and the virtual economy from the perspective of the money demand of the rural residents and the high income stratum. The rural residents’precautionary saving propensity is higher, the city residents’ speculative higher, which causes the savings and the fictitious economy to grow, these will lead to our country "excess money" phenomenon. After the analysis of the theory, this paper demonstrates the relationship between urban and rural income gap and China’s "excess money" from the empirical point of view, and concludes that there is a long-term stable relationship between the urban-rural income gap and the "excess money". Finally, draw the conclusion, and gives the corresponding policy recommendations.