On The Balance Of Payments Structure In The US: Sustainability, Adjustment And Apocalypse For China

The increasing current account deficit and net foreign liabilities in the US have been an uncertainty for the world economy, which arouses board attentions form economists, scholars and policy makers worldwide. This paper analyses the characteristics and sustainability of the BOP structure, and the adjustments of the current account in the US. In my opinion, the balance of payment structure with the characteristics of"deficit & surplus"in the US could be sustainable in the short run, but it is very hard to be sustainable for a long time because of the collapse of the revived Bretton Woods system which is surrounded by the periphery of Asian nations. Thus, the adjustment of the current account in the US will be inevitable. In the face of increasing giant current account deficit The US tries to divert the current account adjustment burden through currencies revaluation. However, I find that the RMB appreciation couldn't solve the US current account deficit problem by doing empirical study, or through currencies joint appreciations in Eastern Asian, that is"Asian plaza agreements"couldn't solve the problem either, although there is theoretical feasibilities by doing so. I find that the US should solve the problem by itself mainly, and other countries should give effective policy supports. Finally, the US will be intent to make an adjustment to balance the current account, which may bring great impact for China's economic development. What actions should China take to face the impact? Detailed analysis is made in this paper.