Research Of Internal Imbalance's Influence On Sino-US Current Account Imbalance

In recent years, under the "Sino-US twin-engine" effects ,the world economy has come up to the highest level of the post-war development , so the surface of global macro-economies can become prosperous.However in recent years, with the increasingly large amount of foreign exchange reserves of China and the current account deficit for the representatives of the U.S.A global economic imbalances arises the concern and unease of the economies of the worldwide.This paper will start with the Ciannelli standards, we use it to compare the three internal macroeconomic variables: consumption, investment and savings ratio of China and the United States respectively. Our research shows that the structural imbalance of China and the United States in internal consumption and investment, savings ratio of the investment is not a fairy tale.In China, highly investment and savings rate is the main power of our economic growth, and that is an unusual thing in other countries , On the contrary, the USA's main power of economic growth is came from high consumption and low investment and savings rate, and that explained why the internal imbalances between the two countries are highly complementary.Subsequently, according to the theory that proportional imbalance of the saving and investment among macro economy affect the current account, the paper concludes that Sino-US complementally internal imbalance is one of the primary causes which lead to huge balance between the two countries'current account. In addition, the analysis show that the mechanism about internal imbalance transforms to external imbalance is the"two-cycle mechanism"which is recommended by the current world as to promote the world economic development. Based on theoretical analysis about the impact on imbalance of current account between the two counties of Sino-US internal imbalance, empirical analysis about the theory by using the expanded Two-gap model to is made. The result of the empirical analysis shows that internal imbalance of saving and investment among the two countries directly lead to the imbalance of Sino-US current account. What's more, the imbalance of saving and investment among the USA has greater influence on the imbalance of Sino-US current account.In the final, based on the analysis about previous chapters, we get the conclusion that separate internal imbalance among China and the USA leads to the imbalance of current account. According to the conclusion, we made some policy recommendations to adjust the separate internal imbalance among the two countries and to change the structure of recent world financial system, so as to ease the huge pressure towards the world economy due to increasing horrible imbalance of current account between China and the USA.