The Test On The Financial Trilemma In China

After 90 years of 20 th century,China's economy has increased steadily.At the same time,China's economic development has grown rapidly,GDP,foreign exchange reserves,import and export trade and other indicators are in the forefront of the world.These characteristics have shown that China already has the country's economic characteristics.In fact,the policy Trilemma continues to be an effective macroeconomic framework.This “mixed” approach to the trilemma has been characterized by continual adjustment of policies in response to a rapidly changing global environment,and it has been regarded as the market-oriented economic reforms.Therefore,this paper studies the policy Trilemma of China has important theoretical and practical significance.Based on the theoretical framework of the “Trilemma”,this article elaborated the development process of China's exchange-rate regimes,financial integration and monetary autonomy.And this paper used FLT index model,relationship between saving and investment model,relationship between the foreign exchange reserves and currencies model.Through the results,we could draw the following conclusions:(1)the elasticity of exchange-rate improved greatly,the monetary policy is independent,but in the long term,the capital mobility was weak.(2)these phenomena didn't impact the relevance of Trilemma,but implied that most of action is not in the vertices of the Trilemma,but in the middle ground of limited exchange rate flexibility,partial integration of financial markets.Though the conclusions,this paper tried to propose three suggestions:(1)maintaining the independence of monetary policy;(2)improving the exchange rate reform mechanism;(3)establishing a safe and stable financial institution and opening the financial markets prudently.