The Analysis Of The Causes Of Excess Liquidity In China

In recent years, due to disorders of inside and outside our country economy structure, saving and investment imbalance, trade surplus remains high, forms the huge foreign exchange reserves, lead to a surge in the money supply in China, the phenomenon of excess liquidity. Excess liquidity can bring serious negative influence to our country’s economy, so we have to attach great importance to cause the excess liquidity problem in China, and take the right way to regulate it.To study on the influence factors of excess liquidity in China, you must find out the following two questions, what is liquidity, and what is the excess liquidity. This paper summarizes the domestic and foreign scholars on liquidity and excess liquidity at the micro and macro level and the definition of excess liquidity measures, and from the Angle of macroscopic research of this paper defines the liquidity and excess liquidity.The mainstream views of most scholars tend to divide liquidity into micro and macro to define two different levels. Micro level of liquidity from the financial markets are defined, refers to the financial market financial assets to quickly liquidate ability. Macro definitions from the angle of monetary liquidity, proposes its essence attribute is monetary liquidity. So we can use various statistical caliber of money supply or credit amount to measure it. In this paper, to study the choose macro point of view, we think excess liquidity is monetary liquidity, namely economies of money supply. On this basis, the paper thinks that the excess liquidity is excess money supply relative to the entity economy. If the money supply is over the needs of real economic growth, more than the balance of the normal economic activities need, the phenomenon of excess liquidity will appears.From the macro level analysis of the causes of excess liquidity and excess liquidity in China mainly comes from the internal factors and external factors. There are two internal factors. One is internal imbalances of savings and investment in China through the central bank system cause excess money supply. The other is to stimulate economic expansion monetary policy taken by the central bank would also cause the excess money supply. And the excess money supply has a direct relationship between the excess liquidity. External factors are mainly due to the countries all over the world, led by the United States, in order to reach the goal of economic recovery, adopt quantitative easing monetary policy.,Through empirical analysis, confirm the above point of view, this article concludes three important influential factors of excess liquidity in our country. First of all, of the excessive growth of foreign exchange reserves is the important reason for the excessive liquidity. Secondly, the government to stimulate the economic development of the fiscal and monetary policy will bring potential excess liquidity. Thirdly, the central bank liquidity tightening interest rates policy for recycling is not effective.Finally, the article puts forward three policy suggestions. Firstly, foreign exchange department should actively strengthen the foreign exchange management, rational use of foreign exchange reserves. Secondly, the government should expand domestic demand, improve the structure of domestic economy, reduce reliance on exports for economic development. Thirdly, we must further improve China’s exchange rate formation mechanism of the market and accelerate the process of interest rate marketization in our country.