This paper argues that the twin surpluses in China＇s balance of payments will disappear in the future as a result of external and internal structural changes. China＇s current account surplus will diminish as a resul...This paper argues that the twin surpluses in China＇s balance of payments will disappear in the future as a result of external and internal structural changes. China＇s current account surplus will diminish as a result of the decline in the goods trade surplus, the expanding service trade deficit and negative investment income. China＇s capital account might shift from surplus to deficit as a result of shrinking net direct investment inflows and more volatile short-term capital flows. When the twin surpluses no longer exist, the normalization of the US treasury bond yields will be sped up, terminating the one-way appreciation of the RMB exchange rate; the People＇s Bank of China＇s pressure to sterilize inflows will be alleviated, and new problems for the People＇s Bank of China＇s monetary operation will emerge; new financial vulnerabilities for the Chinese economy will arise. Finally, the present paper provides some policy suggestions for the Chinese Government to deal with the declining twin surpluses.展开更多
The paper deals with the rapid growing twin surpluses and surging foreign exchange reserves in China’s international accounts withessed in recent years.It observes the characteristics of the phenomenon against the st...The paper deals with the rapid growing twin surpluses and surging foreign exchange reserves in China’s international accounts withessed in recent years.It observes the characteristics of the phenomenon against the standard economic theory and empirical experiences.Then it offers explanation factors:the combined effects of processing trade and foreign direct investments,China’s opening development model underpinned by the intra-product specialization of the contemporary globalization era,and the undervalued exchange rate for the Chinese currency.展开更多
文摘This paper argues that the twin surpluses in China＇s balance of payments will disappear in the future as a result of external and internal structural changes. China＇s current account surplus will diminish as a result of the decline in the goods trade surplus, the expanding service trade deficit and negative investment income. China＇s capital account might shift from surplus to deficit as a result of shrinking net direct investment inflows and more volatile short-term capital flows. When the twin surpluses no longer exist, the normalization of the US treasury bond yields will be sped up, terminating the one-way appreciation of the RMB exchange rate; the People＇s Bank of China＇s pressure to sterilize inflows will be alleviated, and new problems for the People＇s Bank of China＇s monetary operation will emerge; new financial vulnerabilities for the Chinese economy will arise. Finally, the present paper provides some policy suggestions for the Chinese Government to deal with the declining twin surpluses.
文摘The paper deals with the rapid growing twin surpluses and surging foreign exchange reserves in China’s international accounts withessed in recent years.It observes the characteristics of the phenomenon against the standard economic theory and empirical experiences.Then it offers explanation factors:the combined effects of processing trade and foreign direct investments,China’s opening development model underpinned by the intra-product specialization of the contemporary globalization era,and the undervalued exchange rate for the Chinese currency.
