The Impact Of US's QE Adjustment On China's Cross-border Capital Flows

With the bankruptcy of lehman brothers in 2008, the America's subprime crisis began sweeping the world, the world economy affected severely. In order to stabilize financial markets and promote rapid economic recovery, in the condition of the traditional monetary policy on economic stimulus is invalid, the United States launched quantitative easing police. Seven years of quantitative easing released a large amount of liquidity, it not only saved the U.S. economy, but also other countries' cross-border capital flows caused by the spillover effect, impacted on emerging market economies.First introduction chapter elaborated that the paper selected topic background is the United States to implement and exit QE had great influence on the global economy after the outbreak of the financial crisis, as well as the academic significance and practical significance of this study, this paper introduces the international capital flows, that is, the theory of flow theory, the theory of monetary analysis and its relationship with policy system theory research such as theoretical basis. This article apply the research methods of empirical analysis, against this background, The impact of US's QE adjustment on china's cross-border capital flows, finally puts forward relevant policy suggestions. So this paper first introduces the background and reason for America's quantitative easing, reviews the development of quantitative easing. The background, necessity and exit procedures of America's withdrawal of QE is analyzed. Researching the international cross-border capital flows during the QE adjustment, the main research objects are the capital and financial account, banking changes amount and the valet cross-border bank receipt and payment.Furthermore, this paper carried on the thorough analysis of the specific influence factors of QE adjustment on China's cross-border capital flows. China's capital and financial account is as explained variable has carried on the empirical analysis, and joined the virtual variables of QE exit. Explanatory variables mainly selected the following four:(1) The balance of securitiesinthe fed's balance sheet held by the project. Bond buying is one of the main means of quantitative easing in the United States, so the variable can reflect the fed's bond buying.(2) The federal funds rate. During the QE, it has cut its benchmark interest rate remains low, and the federal funds rate is the most important tool of implementation and exit the monetary policy of quantitative easing(QE).(3) The expectations of QE exit. In the 2013, U.S. signal that is about to exit the QE, at this time because of QE's exit expected, many emerging market countries suffered a cross-border capital outflow of a lot.(4) Amount of money supply in the United States(M2). The M2 in the United States can reflect the monetary policy implementation in the United States. Secondly, the author calculated after collecting, sorting and the variables in the first quarter of 2007 has quarterly data, and using eviews7.2 measurement software to analysis and empirical test. The unrestricted VAR model is established in this paper, and using the method of Johenson co-integration test and granger causality test. Results show that the QE adjustment impact on China's cross-border capital flows by interest rate and liquidity, and determine the direction of the capital flows. Finally, based on the above conclusion the policy suggestions are put forward to counter the QE adjustment.