China's Stabilizing Role In The Economic Fluctuations Of East Asia

The problems of the economy in East Asia are always hot issues. The scholars of the world research the question from lots of viewpoints. Such as the symmetry of economic shocks, the currency issues, the trade issues and so on. But the conclusions often are placed in the theory of OCA. Especially when facing the conclusion that the Chinese economic fluctuations are not synchronous with other countries, the scholars always explain it negatively. Surely, the cost of establishing the OCA is very high because of the asynchronous economic fluctuations. But the demand is rather harsh by now. If we can consider the situation from another perspective, we will find a positive consequence——China is a stabilizer in East Asia.This paper can be divided into five parts.Part1 is the introduction. To summarize the Literature Review and the reason why chose the topic. Then the writer points out the shortcomings and innovation.In part2, the author analyzes the economic shocks of East Asia and obtains the result that China's economic is more stable than other countries particularly in crisis. After using the H-P filter to filtrate the growth rate of the economy of the countries in East Asia, we can see the fluctuations are synchronous obviously. However, China is very different from other countries. The reason is that Chinese economy can keep high growth rate while facing the economic shocks. Of course, this phenomenon leads to the correlation between China and other countries low. In OCA theory, China is not comfortable to establish an OCA with other countries in East Asia. However, to carry out one currency policy is early. So we can change an angle of view to interrogate the role of China in East Asia. In part 3, the author analysis the economic fluctuation of China, and compares the economic fluctuation of China in time series. After the reform and opening-up, the width of China's economic fluctuation is smaller. By regression analysis,China's economy growth depends on the growth of consumption of resident and the growth of the investment in the fixed assets chiefly. It's happen to have the same views that the Chinese government often stimulates domestic demand when face to the crisis. The huge capacity of demand can help China resist the crisis and provide market to other countries in East Asia.The fourth part is the focus of the full paper. This chapter analyzes of the factors of China play stabilizing role in East Asia. Firstly, the high growth rate of Chinese economy is the precondition and basement by which China can be the stabilizer in East Asia. The author uses the VAR Model to analyze the influence of the import, and thinks that the investment demands and the GDP growth influence the important obviously. Particularly, the former one plays an important part. Secondly, from the division of work of China in East Asia, the place of China has changed a lot. China is not the last goose in the theory of"the flying-geese model", she is the center of the"New triangular trade"in East Asia. So China is the market supplier of East Asia gradually. On one hand , China brings about the optimize resource allocation. On the other hand, the new market supplier alters the situation that the U.S.A is the primary market supplier with the reduction of the export risk. The economy growth rate of the year 2001 and 2008 are the proofs. From the trade perspective, the level of trade between China and other countries is raising, China is now become a very important partner of the countries in East Asia. Lastly,from the prospect of RMB exchange rate, the RMB exchange rate against the USD is very stable. With the economy place of China in East Asia lifting, the position of RMB is more and more significant. In the contrast, Yen's fluctuation creates a very bad influence to the East Asia.Part 5 is a summary and full text of revelation. The author believes that based on the analysis above, China should play a stabilizing role from itself. The so-called "inner" refers to China's own economic health still needs to maintain sustained and rapid development, which is a key factor to play the role of regional economic stability. The so-called "foreign" refers to China continue to deepen trade cooperation with East Asian countries, through trade channels will transport the strong demand to the East Asian countries. Accompanied by the growing influence of RMB against the U.S. dollar should continue to maintain exchange rate stability. Avoid repeating the yen-dollar exchange rate fluctuations have a negative impact on the East Asian economies in the past.