Influential Factors And Empirical Research On Debt Cooperation Between China And Mongolia

Last 10 years Mongolian Government and Central banks borrowed a huge amount of money from China.I want to study about influential factors and empirical research on debt cooperation between China and Mongolia.Because Mongolian external debt is increasing by every year,we are facing problems that a huge amount of money back pay.Today Mongolia's loans borrowing from People's Republic of China equals 33 percent of GDP.China is the most important investing country for Mongolia.For this reason,this topic is much interesting to me.My purposes of this research is to define the influential factors on debt cooperation between China and Mongolia.I have achieved purposes of my thesis,I used OLS regression method.I also built two model(Chapter 5.2 and chapter 5.3)and confirm to Mongolian economics dependence from China(Chapter 3.3.3)on this paper.In open economy,defining Mongolian foreign loan is based on simple model(Financial depth,GDP and others).It involved hypothesis that Mongolian loan has impact on these variables in the short term.Hence,linear expressions of variables are able to measure the impacts of Mongolian foreign loan.In the first model,dependent variable is debt that Government of Mongolia and Central bank borrowed from China.In Second model,dependent variable is debt that Commercial bank of Mongolia borrowed from China.The amount of a country's external debt has indirect and direct impact on the economy.Specifically,increasing the external debt leads to increase the inflation rate and unemployment rate,decrease saving,affect the monetary policy,as well as is likely to threaten the country's economy and independence.In case the proper amount of external debt exceeds the limit,the macro indicators drop dramatically,the sustainability of society will be lost,or political situation will get worsenThe equation results,the change in volume of debt that Government of Mongolia and Central bank borrowed from China is depending on the following variables such as Mongolia's and China's GDP growth,Mongolia's and China's financial depth,the M2 money-to GDP ratio,and net export.The change in volume of debt that Commercial bank and other sector's borrowed from China is depending on the following variables such as China's GDP growth,Mongolia's and China's financial depth,the M2 money-to GDP ratio,and net export.Mongolia economy is highly dependent on Chinese economy.There are two options for policy of the country's economic development:support export-oriented manufacturing or import replacement.Some countries implement both options,or choose one of them.Thus,the loans for supporting small and medium-sized enterprises are financing the business.As Mongolia take out large amount of loans from neighboring countries,it causes to increase the export productsAlso,the loans from China can be converted investment through commercial banks.Investment may not affect liabilities.Investment can be through intermediary,capital market,and financial market,or reach end users through the form of foreign direct investment.Central bank and Government are only responsible for regulating.In 2011 and 2017,Mongolia's inflation was different from China's inflation trend.Specifically,in 2011,our country's reserve price was lower than the market price.Examining the impact of China's inflation on Mongolia's inflation rate results in China's inflation rate that affects our country's inflation rate for two-time lag.Mongolia's growth is similar to that of China's manufacturing sector,the main export-partner country.Most of the consumer goods are imported from China.The price of commodities in China is becoming the main channel for influencing Mongolia's inflation rate.The result is mainly due to China's inflation to Mongolia's inflation.In addition,Mongolia economy is highly dependent on mining products.The growth of China's manufacturing sector has been influencing Mongolia's economic growth.