The Influence Of China’s Import And Export Balance On Money Supply

China’s foreign trade surplus has continued to rise since 1994,especially after China’s accession to the WTO.Due to the pegged exchange rate system and the compulsory settlement and sale of foreign exchange system,the foreign exchange reserve has continued to rise over the years,and both the basic currency and the broad currency have expanded at an extremely fast speed.This phenomenon has profound economic logic,which inspires the author to analyze and explore the internal relationship between China’s foreign trade and China’s money supply,hoping to clarify the mechanism of the two,thus promoting the healthy growth of China’s economy.This paper combs the theory of money supply,and analyzes the mechanism of the impact of import and export balance on China’s money supply at different levels by combining the analysis of the price-seigniorage flow mechanism and the central bank’s balance sheet.Therefore,the structural autoregressive SVAR model is used to verify the impact of China’s import and export balance on the money supply at the two levels of basic money and broad money.The results show that the import and export balance has a short-term and direct positive impact on basic money and a longer-term positive impact on broad money.At the same time,the conclusion is verified from the asset side of money supply by using social financing scale variables.This paper establishes a fixed effect model based on panel data of 29 provinces in China from 2008 to 2018,and analyzes the impact of China’s import and export balance on China’s loan balance.The results show that China’s provincial import and export balance has a significant positive impact on the loan balance of each province,indicating that the import and export balance has an important impact on the money supply of each province in China.Finally,the two-step system GMM and differential GMM model are used to further test and explain the effect of import and export difference on money supply,showing the consistency and validity of the empirical results.The stability test and analysis are carried out by replacing the singing credit stock with the deposit balance of financial institutions in various provinces.