A Comparative Study On International Investment Position Based On Valuation Effects And The Dollar's "Exorbitant Privilege"

The complete international balance of payment statistics includes not only balance of international payments which records the transaction flow,but also international investment position which records the stock of foreign financial assets and liabilities in the particular time point.Changes in the international investment position caused by the transaction,price changes,exchange rate changes and other factors.The change caused by price changes and exchange rate changes are referred to as valuation effects.In recent years,as the scale of China's international investment position expands unceasingly,the status of the international investment position and valuation effects attract more attention.This paper analyszes the development and Status of China's IIP,empirical tests and estimates the scale and structure of the valuation effects,then discusses the difference and reason after contrasting with the international investment position and valuation effects of United States and Japan.At First,based on past data of China's international investment position,domestic and overseas reports,this paper analyzes the development and present situation of China's international investment position,and points out the characteristics and the existing problems of China's international investment position.Then,this paper empirical tests the existence of valuation effects,and estimates the scale and composition of the valuation effects of China's international investment position changes.Finally,this paper compares with the structure of the U.S.and Japan's international investment position and the valuation effects,and discusses the reasons of differences and countermeasures.This paper found that,China's international investment position has structural imbalance problems,including currency mismatches and subject mismatch.The currency mismatches make in China's international investment position face a great risk,and the subject mismatches make the yield of foreign property low and the cost of foreign debt high.Empirical test shows that,China has been affected by negative valuation effects in recent years.After contrasting with the U.S.and Japan's international investment position and valuation effects,this paper finds that there are tremendous differences between the different countries.Valuation effects of U.S.and China are diametrically opposite,China damaged from the influence of the valuation effects and the U.S.can benefit from it.This paper believes that the dollar's center position in the international monetary system making the United States own the "exorbitant privilege" is the reason for this difference.This paper comes up with some suggestions to avoid the valuation effects loss,include Coordinating internal and external economic,improving the reserve assets management,adjusting the foreign assets structure,promoting the internationalization of the Renminbi.