Analysis In China's Balance Of Payment Double Surplus

China's balance of payments double surplus had become a hot point since the combination of the exchange rates in 1994, at the same time, the spiraling foreign exchange reserves also became a focus. This paper elaborates the surface and substantial reason for double surplus through analyzing the phenomenon of sustained surplus from 1994 to 2006, which states the reason for the current account surplus: insufficient domestic demand in China, high savings, rapid development of processing trade, abundant cheap labor, and so on. Reason for the capital account surplus: we have to introduce a large amount of foreign direct investment because of limited domestic technology, however, most Chinese enterprises investing in other country are inadequate, this is to say, more capital flow in but less out. Double surplus have played an important part in economy of China, but on the other hand, it means export of our resources, which will restrict sustainable development of our country, besides, it result in the RMB revaluation pressure and loss of capital revue, will weaken control power of the central bank of China in money supply and effectiveness of monetary policy. Therefore we must pay more attention to it and deal with it cautiously. The key point is to expand domestic demand and consumption, besides, continue to develop and update the processing trade, bring in the foreign investment real helpful, enhance the ability of domestic enterprises to go out, improve the credit system of enterprises, and pay more attention to import, all of which also will play significant role to economy of China.