The Impact Of US Quantitative Easing Monetary Policy Exit On China Cross-border Capital Flows

December19,2013, the Fed declared to reduce the size of the asset purchaseof$10billion monthly from the beginning of January2014, which marks the officiallaunch of the Fed’s quantitative easing policy exit. At the same time, with the gradualadvance of the Fed’s policy, its impact began to spread across the globe.At the end ofOctober2014, the Fed cut the size of the asset purchase, reducing the money supply,tighten dollar liquidity, leading to global capital fluctuations appearing in varyingdegrees. Based on this background, this paper combine the theoretical researchmethods and data analysis to explore the impact of the US quantitative easing policyout on our cross-border capital flows, and propose targeted policy recommendations.In this article, firstly, we review the US quantitative easing policy in brief, thenSort out the Fed’s quantitative easing policy process and on this basis, analyzise theFed’s quantitative easing policy considerations factors and what may bring results andrisks.Secondly, under the US withdrawal from quantitative easing internationalfinancial environment, we review cross-border capital movements and trends on thewhole, and then as for a number of factors affecting the cross-border capital flows,The article analyze how the Fed’s quantitative easing policy affect on Chinacross-border capital Flow and find there are kinds of mechanism as follows, includingthe interest rate transmission mechanism, the transmission mechanism of theexchange rate, asset price transmission mechanism and the transmission mechanismof the real economy. In addition, the article also inventive what channels may do itand finally discover the interest rate channel, the exchange rate channel, the channelprofit, goods and other trade routes which may affecting our cross-border capital.Thirdly, In view of China’s banking exchange and valet foreign receiptscircumstances change in2010, the article explain the Fed’s quantitative easing policyout on China cross-border capital flows specifically and pointed out what the Fed’squantitative policy exit may bring cross country border liquidity risk.Finally, the article points out numbers of policies and recommendations for the prevention of exit of US quantitative easing policy of the impact of cross-bordercapital flows, for example, advancing process for marketization of interest rates andthe exchange rate of RMB,reinforcing the supervision and management of foreignexchange, accelerating the transformation of economic development and thestrengthening of international cooperation for prevent abnormal fluctuations ofcross-border capital raised relevant policy recommendations.