Research On The Spillover Effect Of China's Moneysupply On The Economy Of Malaysia

With the advancement of China's comprehensive national strength,China's economy has strong ties with the world economy.Additionally,the Sino-Malaysia international trade and economic cooperation have reached a great situation.Thus,the implementation of China's currency policies could adjust China's economy and of course,it may pose a spillover effect in international stage-which may affect Malaysia's economy positively or negatively.In order to enhance the peaceful,stable,safe and harmonious relationship between Sino-Malaysia relationship,this paper aims to study China's currency change radio in relation to Malaysia's economic spillover mechanism and spillover channels,respectively.Apart from that,it also exams China's currency change radio in relation to Malaysia's economic variations'spillover directions and major spillover channels.With the guidelines of MFD model and NOEM model,this paper exams the current situations of Sino-Malaysia cooperation in relation to China's currency change and Malaysia's economic spillover mechanism and spillover channels via quantitative analysis method.Base on the comprehensive research of China's currency change radio in relation to Malaysia's economic spillover situation at this moment,the SVAR model,including the information of China's output,Malaysia's Output and other variations,have been used to analyse China's currency change radio in relation to Malaysia's economic spillover effect and spillover channels quantitatively.Several results,however,have been found throughout the entire research.Research studies find that China's currency change radio has spillover effect on Malaysia's economy,which means that the short-term influence is negative while the long-term influence is postive.Besides,the increase of China's money supply makes the import and export situation of Sino-Malaysia worse within a short period,but it becomes better in the long-run.The increase of China's money supply forces Malaysia's domestic deflation of prices in a short-period.The increase of China's money supply contribute to Malaysian Ringgit's appreciation,and it also makes Malaysian domestic interest rates increase in some degree.Lastly,based on the degree of contribution,the ranking of spillover channel is:the trade channel?the interest rate channel?the exchange rate channel?the CPI channel.According to these findings,several recommendations are raised:i)China's currency policy should be controlled preciously and directionally;ii)China needs to explore the suitable coordinating mechanisms and promote the win-win situations between China and Malaysia;iii)enhance the cross-border financial cooperation innovatively,and then promote the internationalisation of RMB;iv)optimise the structure of Malaysia's trade with China,minimize negative spillover effects;v)improve the level of Malaysia' monetary policy.