| Since the reform and opening policy began,the ratio of M2/GDP in China presents a trend of escalation continuously.It grew from 0.31 in 1978 to 1.63 in 2007.Such growth situation has drawn a high attention of the theorists and decision-makers in China.But there's a wide spectrum of opinions on this high ratio of M2/GDP problem.From the existing research results,most of economists are trying to answer two questions as follows:Firstly,why the ratio of M2/GDP in China grows so quickly?Secondly,are there any underlying risks beneath this high ratio ?The attitude of theorists and decision-makers to M2/GDP have transformed from the affirmation of the marketability and the monetization performance in 1990s into an anxiety on the system problems and the high financial risks in Chinese economy which are involved in this high ratio of M2/GDP.This paper have expounded the relationship between this high ratio and the financial risks,and also confirmed that anxiety is not groundless.Based on references classified by the different attitude towards the relationship between the high ratio and the financial risks,this paper points out the deficiencies and the helpfulness in each typical view and with that comes up with a more accessible research framework for this problem,then explains the reason for the high ratio of M2/GDP by monetization,non-performing loans and mirror image of foreign exchange reserve.After analyzing the relationship between these factors and the financial risks,the paper concludes that the ratio of M2/GDP has something to do with the financial risks undoubtedly.The liquidity of the commercial bank flood into the commodity market or the capital market will bring up a hidden risk of inflation,it also give an answer to the paradox of the high ratio of M2/GDP which existed with the low ratio of inflation rate at the same time in 1998-2003.In the end, through the VAR model about CPI,the paper comes up with some useful advice. |
PDF Full Text Request