Analysis Of China’s International Debit And Credit Based On The Angle Of The Capital Formation Ability

The whole international debit and credit system of a country includes the BOP in the flow aspect and the ⅡP in the stock aspect. The International debit and credit system is not just important to the relationships between one country and other countries or regions, but also affects the domestic society and economic sustainable development. We are faced with the situation that the BOP "double surplus" and the increasing NIIP exist In China, but the asset profitability is too low. So the study of international debit and credit has important theoretical and realistic significance.This paper will explain our country’s international debit and credit from the perspective of the capital formation ability. Previous literatures have explained international debit and credit in stock or flow fallen from many angles. This paper argues that the capital formation ability has a strong ability of explaining our country’s international debit and credit. And the Previous researches in this aspect have a big flaw:they only interpret the amount of savings-investment transformation for the capital formation ability, but ignore the investments between different industries. This paper will combine the above two aspects to define the capital formation ability and demonstrate the theoretical relationship between the capital formation ability and international debit and credit. We will explain the mechanism of action by establishing the theory model. This paper is divided into six parts:the first part is introduction; the second part is the comprehensive analysis of the evolution of China’s international debit and credit and the reasons; the third part is the Theoretical relationship between the capital formation ability and international debit and credit relationship and model building; the fourth part is to use the capital formation ability to explain the international debit and credit in China; the fifth part is the empirical study of the capital formation ability and China’s international debit and credit; the sixth part includes the conclusions and recommendations.This paper draws a conclusion through theoretical derivation:On the one hand, the capital formation ability will influence the allocation of production factor between the traditional and emerging industry, which affect the production scale and development prospect of different industries, and ultimately affect the status of their products in the international market and the international balance of payments; on the other hand, the capital formation ability will also affect the structure of the international investment position and its profitability. Applying these theories to our country we can find the following:Firstly, because of the downturn in consumer demand in China, it will be a challenge to transform huge savings into investment effectively for our ability of capital formation; Secondly, the capital formation ability of traditional industry in China is far higher than that of emerging industries, which is closely related to the financial system in our country, and a large number of capital accumulating to the traditional industry makes our country’s traditional industry produce a large number of export products, and export-oriented foreign companies lead to the increase of export depending on FDI; thirdly, through the comparative analysis with the United States, the profitability of China’s international investment position is closely related to its structure. The results of the empirical study proves that banks as the main body of the financial system in our country, makes large capital flow to the traditional industry, which brings price advantage and eventually leads to international payments surplus. Based on the above reasons, this article put forward the following recommendations in order to improve the ability of capital formation in our country, and improve the state of international borrowing:to promote consumer demand growth; to promote the transformation and upgrading of industrial structure to improve capital allocation; improving the financial system construction; to enrich the financial market level, give full play to the role of market in the capital pricing.