A Study On The Changes Of The Balance Of Payments Pattern And Its Impact On Money Supply In China

Since the reform of foreign exchange management system in 1994,China's international balance of payments has continuous surplus in the current account as well as the capital and financial account.However,since the second quarter of 2014,The situation of "Double Favorable Surplus" changes,financial accounts began to deficit,and foreign exchange inflows decline,which led to the decline in funds outstanding for foreign exchange,and change the way of money supply.Now China's balance of payments presents the characteristics of the current account surplus and the two-way fluctuation of financial account.How does the changes of China's balance of payments accounts affect the money surplus? In this paper,we analyze theoretically and empirically the data from 2002-2015,The structure of this paper is as follows: Firstly,this paper based on literature review,analyzing the changes in China's international balance of payments structure and the main factors that affect.Secondly,it analyzes the mechanism of China's balance of payments influence on money supply,and then analyzes the relationship between the balance of payments and the situation of money supply in recent years.Finally,according to the conclusions drawn from the relevant policy recommendations.This paper concludes that: since 2009 the scale of China's current account surplus is increasing rapidly,but the proportion of GDP is declining.Its results of the economic cycle,the terms of trade,the difference between savings and investment.China's financial accounts are the deficit in 2012 and 2015,the changes in its sub-account analysis found that China's foreign direct investment and other investment under the large-scale capital outflow,its results of Policy factors and market factors.In the pattern of China's current account surplus and financial account balance fluctuating,the impact of foreign exchange on money supply declined than before.The central bank now uses open market operation,reloaning and some innovative monetary policy tools to provide base money and increase the loan of financial institutions to supplement liquidity.The central bank should face this new change,try to establish a new normal mechanism to supply money.