| Recently, the problem of global imbalance arouses more and more attention. Scholars, administrative authorities, as well as international institutions have discussed the reasons of global imbalance, its sustainability, possible adjustments channels and the impact of the adjustment of global imbalances on the world economy and relative countries. This paper discussed the reason of the Twin Surpluses in the international payments in China with the background of the global imbalance, and the reason of its sustainability, adjustment policy, as well as the impact of this adjustment on Chinese economy and global imbalance.The new round of global imbalance began in the 1990s in the 20th century. The current account deficit of the United States began expanding in 1996. The current account deficit of the United States in 2004 is about three-fourths of the world's total deficit, which become the key reason of both the imbalances in global current account and the global imbalance. The current account imbalance in the United States is related to the whole world, china is the major source of the U.S. trade deficit, even though it's not the only one. China has become the largest source of the U.S. trade deficit since 2001 and its trade surplus against the United States is still expanding, the imbalance in trade between china and the United States has become an important factor affecting global imbalance.The reasons of global imbalance can be explained thoroughly from the savings-investment perspective. The savings and investment of industrialized countries with United States as their head are in a declining trend since the 1990s. East Asian countries led by China have been on an upward trend, the complement of high savings in east Asia and low in U.S. led to a trade imbalance between the United States and East Asian countries and the ultimately represents the reason for the imbalance in the global economy.The development of global imbalance has attracted more and more attention by academia and administrative authorities of all over the world, Two entirely different views about the development trend of global imbalance prevail in the academia. Judging from the present international monetary structure, the dominant position of dollars in the near future is difficult to shake. Temporarily, global imbalance will not change. Judging from the perspective of capital flows. East Asia and the United States current account imbalances may lead to a substantial depreciation of the dollar against other major currencies. There is a great risk of Global imbalances, the author argues that the U.S. dollar's status in the world's monetary system has far exceeded the ratio which the GDP of the United States in the world's total GDP, its financial strength far exceeds its economic strength. U.S. huge current account deficit and the rapid accumulation of net foreign debt situation sooner or later need to be adjusted.Economists have different views in the way of adjustment of global imbalance. There are two major: The United States adjusting its external imbalances alone and the Asian countries taking the responsibility of the imbalance'adjustment. In author's opinion the best way of adjusting is to work together for the slow adjustment of the global imbalance. There is no doubt that the global savings and investment should be balanced. The pressure of the adjustment should be bore by all the countries of the world. The adjustment of global imbalances will bring to China both opportunities and challenges. The adjustment of global imbalances will play a role in promoting the adjustment of Twin Surpluses in China's international payments and improve the trading environment between China, Europe and the United States. Adjustment of global imbalance will contribute to China's industrial restructuring and domestic consumption-led economic growth model to achieve. What's more, the impact on the economic of changes of RMB exchange rate is also possible to be expansion. From above all, we can see that the impact of adjustment of global imbalance in sustainable and healthy development of China's economy is positive. At the same time, how to maintain a sustained and stable growth of China's economy, guarantee the stability of China's financial system and how to maintain the appropriate foreign exchange reserves are the problems China must also be reasonable and stability to face. In short, China will face a series of new problems in adjustment of the global imbalance.Under the background of global imbalance, there are internal and external economic imbalances in China's economic development process. The specific performance is the continuously expanding surplus on current account and capital and financial account since the mid-1990s. Which should be called Twin Surpluses in China's international payments. Twin Surpluses has grown in the process of economic globalization and the formation of global industrial restructuring by China's reform and opening up policy. In this process China established a model of export-oriented economic growth. With the expanding of Twin Surpluses in China's international payments, the accumulation of foreign exchange is also reserving. To maintain the exchange between national currencies and the dollar, keep the development of the export-oriented economy. These foreign exchange flows back to U.S.A in reserves of U.S. government bonds which with very low interest rates, keep United States to maintain high consumption. Then the remainder flows to Asia in the form of foreign direct investment which maintains the current global imbalance.The Twin Surpluses in China's international payments has played a positive role in China's rapid economic growth for a certain period of time, it also brought some problems: the continuing surplus in the current account led to the deterioration in the international trade environment. As China's continuous improvement of dependence on foreign trade in economic development, the deterioration of the trade environment has the potential to have a very negative impact on China's economy. Meanwhile, the rising dependency on foreign trade may suffer "The Benefits Trap". The continued expansion of Twin Surpluses in China's international payments led to the huge economic costs and financial crises in China's economic development. Holding too much too large foreign exchange resulted in the opportunity cost, may suffer big losses during changes in the exchange rate. Lead to pressure on the stability of the RMB exchange rate, the foundation put tremendous on currency. In fact, Twin Surpluses is a problem need to address in the overall development of China's economy more than a favorable balance of trade and foreign investment.This paper concludes several policy recommendations to the adjustments of the Twin Surpluses in China's international payments. The Twin Surpluses in China's international payments reflects the internal and external imbalance in the process of economic development in China. Therefore, the adjustment of the "double surplus" should also be initiated with the adjustment of the internal and external imbalance of China's economy i.e. to realize external balance by changing trade policies and the strategy of introducing foreign direct investment and reform the exchange rate system, to realize the internal balance through the upgrade of the industrial structure and expanding domestic demand.China's Twin Surpluses to adjust global economic imbalances can effectively ease the adjustment of the U.S. current account deficit situation. The reform of Chinese exchange rate regime in china will play a positive role in the improvement the stability of the global financial system. The adjustments of Double Surplus in China's international payments will enable China to achieve a transfer of export from labor-intensive products to capital-and technology-intensive products, and thus boost the upgrade of the industrial structure which will play a positive role in a sustainable development of the Chinese economy in a circumstance of internal and external balance. |
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