Fluctuations And Influencing Factors Of China’s External Wealth-

China has built up great external wealth in book value for the past years with the current account balance accumulating year by year. However, large and frequent fluctuations of asset prices and exchange rates leave China’s external wealth suffer huge risks of value depreciation, which can not be observed directly from the Balance of International Payments.Based on stock-flow-adjustment model, the paper estimates China’s foreign assets and liabilities during the period of year1982to2012by adopting more reliable substituting data. Then we learn the overall and structural picture of China’s foreign wealth with employment of statistical analysis and estimated data from the previous section. Through the following econometric analysis, we investigate the role of accumulated current account and valuation effect caused by fluctuations of asset prices and exchange rates in the determination of China’s external wealth. Finally, we carry out the further detailed study on how financial development both inward and outward affects one country’s external wealth, by introducing the adjusted dependency ratio index and multi-angle selection of financial development index in the international comparison perspective.There are at least five important discovers in our paper. Firstly, according to estimated data, in most years China belongs to net debtor countries rather than net creditor ones. Secondly, Current account accumulation is still the fundamental support for the increase of China’s external wealth. Thirdly, the negative valuation effect caused by the appreciation of RMB is unfavorable for improving China’s external wealth. Fourthly, the obvious yield differences between China’s foreign assets and liabilities, produced by assets and liabilities structure, are one of the most important reasons for value depreciation of China’s net foreign assets. Last but not the least, given the basic economic situation, China’s backward financial development compared with developed financial system creates the current situations that China invests on virtual products like securities in developing countries with relatively lower income, while attracting overseas funds to invest in domestic entity economy by relatively higher cost. Therefore, in the process of economic globalization and financial integration, China should make much more efforts to develop and perfect domestic financial market.