The Analysis Of Excess Liquidity In China

The problem of excess liquidity is still a prominent issue in China's economic. The point of the whole year's macro-control is to control the excess liquidity. So it is very realistic for the economy to analyze the excess liquidity.First it is introduced that the background and realistic significance of study of excess liquidity. Then it gives a review about the recent research on this issue. On the basis of the conception of excess liquidity, this paper analyzes the effect and reason of excess liquidity from macro perspective. At last, the paper provides some comments and suggestions to solve the problem.The whole paper can be divided into five parts:In the first chapter, the concept of liquidity and excess liquidity are introduced, as it is the base of further analysis. This chapter can be further divided into three parts. The first is the conception of liquidity and excess liquidity.In the second chapter, the manifestation of the problem of excess liquidity is analyses by forms and graphics. This chapter has four parts: The first part points that excess money supply is a sign of excess liquidity. The second part demonstrates that the widening gap between the growth of M2 and Ml is one aspect of the problem of excess liquidity. The third part shows that the gap between deposit and loan in financial institutions is a performance of excess liquidity. The last part performances that the excess reserves of financial institutions in central bank is another manifestation of the excess liquidity.The third chapter describes the negative effects of the excess liquidity in China. Excess liquidity makes money easy to get and highs prices of assets, which lead to inflation of the whole economy. The second and third is the situation of recent Chinese excess liquidity and the excess liquidity of Japan in 1980s.The forth chapter gives reasons for excess liquidity. The four reasons are: The global excess liquidity, the rapid growth of foreign exchange reserve, the imbalance of China's economic structure, difficulty of savings turning to investment.The fifth chapter point out that many methods should be used at the same time to solve recent excess liquidity as it is a review of many problems of our economy.