The Sustainability Of The Global Current Account Imbalance

A prominent contradiction exists in the current global current-account imbalances. That is, the current account deficit of The United States and England, with continuous surplus of the emerging economies and oil exporter. In addition, deficit and surplus of the global current-account imbalances concentrated in a few countries and the amount is more and more huge. It has brought great risk to the international financial market and the world economy. Therefore, the sustainability of global current-account imbalances gradually becomes the focus of many researches.The theoretical significance lies in, analyzing the evolution of global current-account imbalances and revealing the essence of global imbalances in the perspective of financial development and international division. And it's meaningful to provide new thought for the research of global imbalances and promote the research on global current-account imbalances. The paper has huge realistic significance. On the one hand, studying the source of global current-account imbalances help take effective measures to alleviate long-standing large-scale economic imbalances and solve the problems caused by the imbalance. On the other hand, the paper provides the theory basis and the reference for decision for China's adjusting the economic and financial development strategies.The paper studies the sustainability of the current account imbalances as follows:Fist studying the main reason of the imbalance. Then judge the sustainability of global current-account imbalances through analyzing the sustainability of the main reason. Therefore, the article follows in the perspective of financial development and international division. First it analyses financial development relative to manufacture development theoretically. Namely, the main reason of global imbalances is the new international division between finance 1 and manufacture. And the paper reviews and summarizes the research on global current-account imbalances based on financial development and international division. Then it measures global economic imbalances influenced by financial development relative to manufacture development though panel data analysis. Then it judges the sustainability of global current-account imbalances through analyzing the sustainability of the international division between finance and manufacture.Based on the analysis, the paper concluded:First, there are Differences between countries in the new form of international division and financial development caused by the deepening division of the global value chain and expansion of elements. This is the main reason of global current-account imbalances. Second, there exist its reasons why the new forms of international division in certain period. And this would be a long-term problem. But the new international division itself is unsustainable because it includes risk and contradictions which is against the sustainable and healthy development. So the global current-account imbalances caused are unsustainable. Third, the global current-account imbalances could not be resolved through the adjustment of price or exchange rate or short-term policy, but through structural and multilateral adjustment.Finally, on the basis of the conclusions, it puts forward some policy recommendations against the current global current account imbalances. First, it's important to adjust the structure of economic development and the mode of economic growth. It has important effect on sustainable and steady development of the economy that the balance and coordination between finance and manufacture. Second, industrial upgrading is necessary. Especially developing advanced manufacture to avoid being limited by modular. We should recognize our own factor endowments and comparative advantage at the same time. Deal with relationship between manufacture and financial development to make them promote coordinated each other. Third, reform the financial system. China's financial system lack small-sized and medium-sized banks and local capital markets. So it's helpful to promote the construction. And improve the proportion of capital income by encouraging the investment.