The Research On Adjusting China's Balance Of Payments By The Fluctuation Of RMB Exchange Rate

China experienced a nearly 30 high-speed economic growth,there is some structural imbalance in economic development,one of the most outstanding performances is sustaining expansion of the current account surplus and capital account surplus,that is,"double surplus" phenomenon,which is not proportionate with China's stage of economic development.But since July 2005,the appreciation of RMB which has experienced more than two years does not decrease China's vast surplus of balance of payments.On the contrary,China's surplus of balance of payments has continued to enlarge trend.Thus,whether the appreciation of RMB can effectively adjust China's balance of payments has been widely concerned.Based on the traditional Mundell-Fleming Model(hereinafter refers to M-F model),the paper puts forward an extended M-F model under the interest rate control according to China's reality condition,and uses Johansen Cointegration test to analyze the data from 1982 to 2006.The result verifies the deduction from the extended M-F model and shows that we can adjust China's vast surplus of balance of payments by the appreciation of RMB,but the method is not effective.In addition,we can also retrench the government's expenditure or control the foreign direct investment inflow to adjust China's vast surplus of balance of payments,which is more effective than the appreciation of RMB.The paper constitutes of six chapters:Chapterâ… introduces the research background,the significance,the present situation of domestic and foreign research,the research frame,the possible innovation and insufficiency and so on.Chapterâ…¡describes the theories of adjusting the balance of payments by the fluctuation of exchange rate,including flexibility analytical method,absorption analytical method,monetary analytical method,as well as internal and external equilibrium theory.The theories provide a theoretical basis for how to adjust China's vast surplus of balance of payments.Chapterâ…¢analyzes the reality condition of China's balance of payments and the impact on the balance of payments by the fluctuation of exchange rate.Through the analysis of total quantity and structure,we understand the principal account flow and the differential changes of China's balance of payments.Finally we qualitatively analyze the relationship between the fluctuation of exchange rate and China's balance of payments.Chapterâ…£puts forward an extended M-F model under the interest rate control according to China's reality condition based on the traditional M-F model,and applies the mathematical method to deduce the effect of fluctuation of exchange rate, government's expenditure and foreign direct investment to balance of payments.Chapterâ…¤sets up an econometric model based on the theoretical model of Chapterâ…£,and uses Johansen Cointegration test to analyze the China's annual data from 1982 to 2006.The result verifies the deduction from the extended M-F model, and compares the effect of these factors.Chapterâ…¥is conclusion and policy suggestion to adjust China's vast surplus of balance of payments based on the empirical results of Chapterâ…¤.