Research On The Causes Of Capital Outflow In China Based On The Perspective Of RMB's Internal And External Value Deviation

Since the reform of China's exchange rate in July,2005,the RMB has transformed into a managed floating exchange rate system and has embarked on a path of appreciation and attracted many foreign investors to invest in China market.The capital flow of our country is dominated by capital inflow.The financial crisis in 2008 and the impact of the European debt crisis in 2012 have made the domestic economy more volatile.China became a net exporter of capital in 2014.This article distinguishes China's capital flows from four indicators including net errors and omissions,foreign exchange reserves,foreign exchange purchases,bank deposits and sales and finds that China has a relatively large capital outflow since the second quarter of 2014.This article reviews the related theories of capital outflows and expounds China's capital output from consumption and investment channels from the perspective of the deviation of RMB internal and external values.Then it examines the impact on short-term capital flows in China from the perspective of economic openness,the deviation of RMB internal and external value,economic growth,interest differential and global investor risk appetite and construct a VAR model based on the data from August 2005 to September 2017 especially capital outflows that occurred in 2014-2017.By comparing the empirical results,we draw some conclusions as follows.The degree of economic openness has a weaker impact on capital flows.The deviation of RMB internal and external value has a negative impact on capital flows and has the greatest impact in 2014-2017 sample intervals.The economic slowdown is important factor leading to capital outflows;interest differential is positively related to capital flows and the narrowing of interest spreads is also one of the causes of capital outflows.The decline in global investor risk appetite has a more stable impact on capital outflows and has a greater contribution to capital outflows in the second quarter of 2014.Based on the above,this paper puts forward corresponding countermeasures and suggestions.