Analysis Of Foreign Exchange Management Policy For Short-Term Capital Flows In China

After America's subprime crisis in 2008,to stimulate its domestic economic growth,the European countries and the United States have adopted a loose monetary policy.As the international short-term capital flows become more frequent and changeable,China also has experienced the rapid flow of short-term capital and sudden flow process reverse,leading to some negative impacts on China's economy.China is also facing a decline in economic growth,economic restructuring,and intensifying trade frictions at the same time.On one hand,China needs to strengthen foreign exchange management to reduce the influence of short-term capital flows on the economy and finance.On the other hand,China needs to further reform its foreign exchange management system through decentralization and transferring more powers to facilitate trade and investment and add new impetus to the substantial economy.Therefore,to adopt the challenges arising from the intensification of short-term capital flows,it is especially essential to make an in-depth study of China's foreign exchange management policies in the new era.By studying China's foreign exchange management current situation of short-term capital flow in the new era,this paper analyzes foreign exchange management policies and their effect,and then find the reason causing the decline of the effect.Also,it proposed suggestions for promoting the scientific and effective foreign exchange management policies made by the relevant departments,preventing and dissolving major financial risks,deepening the reform of China's financial innovation,and maintain a healthy and steady economic development,which has a positive meaning.The paper is divided into six chapters.The first chapter serves as an introduction,presenting the background and significance of the research,the related research summary,and the research thoughts and methods.The second chapter is about foreign exchange management of short-term capital flows theories,principally introducing the theories of public administration,which provides the theoretical foundation for the research paper.The third chapter summarizes current situations of short-Term capital flow and foreign exchange administration system in China.First of all,it explains the definition and features of short-term capital flows and calculates the scale of China's short-term capital flows by applying the mixed algorithm.Secondly,it answers the questions of "who is in charge","how to manage" and "how to reform the relevant foreign exchange management system" from the following aspects about China'sshort-term capital flows: the relevant management divisions,the framework and evolution of foreign exchange management system.The fourth chapter is an analysis of current situation and effect of China's foreign exchange management policies and studies China's foreign exchange management policy goals and tools.Based on the features of China's foreign exchange management,applying the fact-based measurement method,it compares the effects of China's foreign exchange management policies before and after the subprime crisis in 2009.According to the change in the correlation between China's investment and savings rate,we conclude that the effect of China's foreign exchange management policies has declined since 2009.Chapter five examines the reasons why the impacts went down by studying the aspects of the policy instrument application,policy content,and policy implementation.When it comes to political tool application,this paper mainly analyzes possible issues in the policy formulation and implementation process,from the perspective of the internal relationship between policy goals and the coordination of various policy tools.In terms of policy content,it mainly starts with the systematic and rationality of the policy itself,analyzing the possibly existing policy holes and supervisory blind spots.Regarding policy implementation,the current problems are mainly analyzed from three aspects: Banks' execution of foreign exchange management policies,supervision on multi-division coordination,and off-site supervision of the foreign exchange.Chapter six is about suggestions on short-term flowing foreign exchange policies.Concerning the reasons for the decline in foreign exchange management policy effect,it puts forward several proposals,such as balancing between facilitation and risk prevention,improving foreign exchange management policies,establishing an incentive and compatible supervision mechanism of the Bank,strengthening the management of short term capital flow of the top-level design,and strengthen the relevant policy suggestions about the construction of the foreign exchange management information system.There are several innovations in this paper.First,existing papers all focused on analyzing the effectiveness of China's foreign exchange management over a whole period.However,international short-term capital flows have intensified since 2009.Meanwhile,in response to the call from the state council upon decentralizing and delegating powers,China's foreign exchange administration has proposed "five transformations" for foreign exchange management.They have launched a series of major reform policies in the areas of cargo trades,service trades,overseas investment,cross-border guarantee,and cross-board financing.Banks are given the authority to handle most foreign exchange transactions.The procedures for these transactions are simplified,and some restrictions on existing foreign exchange projects are loosened or canceled.The concepts,meanings,and methods of foreign exchange management have changed considerably.However,facing the severe circumstances of short-term capital flows,can these policies improve the facilitation of trade and investment while restraining the capital flow? This paper made a quantitative analysis and compared the latest data on foreign exchange management policy effects before and after the proposal of "five transformations" in 2009,and reached the conclusion that the effect has declined.The second innovation is that existing papers about foreign exchange management mainly analyze and study it from a single professional area.Different from these research papers,this one analyzes the causes leading to the decline of the effect from multiple perspectives and puts forward targeted advice by comprehensively applying multidisciplinary theoretical information such as public management,foreign exchange management,and public economics.