Under The Open Economy, China's International Balance Of Payments Situation

The four main objectives of an open economy, namely, economic growth, mil employment, stable price and equilibrium of balance of payment, can be summarized as internal equilibrium and external equilibrium. The relationship between them is that, internal equilibrium is the basic guarantee of the external equilibrium; meanwhile, sound balance of payment situation is beneficial to the realization of internal equilibrium. As far as our country is concerned, with the rapid growth of socialist market economy, the strengthening of domestic economy is directly reflected in the changes of balance of payment (BOP). Also, with the quickening steps of opening up, the stable operation and smooth development of China's economy faces much more external uncertainties. Consequently, balance of payment will exert more important influence on the domestic economy. Therefore, the study of the BOP situation under Open economy is of realistic meaning. This thesis mainly explores and studies the affects of domestic and international economic factors on balance of payment of China, and some new issues emerging in BOP under open economy conditions. The thesis consists of three parts. The first and second part, respectively from theoretical and practical angle, studies the BOP situation of China during the period from year 1985 to 2000. The conclusion reached thereafter is that, first, the BOP of our country is the results of the mutual action of domestic and international factors; secondly, though BOP is the result and reflection of domestic economy, it also forms some restriction over the domestic economy. In the last part, some forecasts are made about the BOP of China after its accession to WTO.