| ID | 137600 |
| Title Proper | Vanishing of China's twin surpluses and Its policy implications |
| Language | ENG |
| Author | Zhang, Ming ; Tan, Xiaofen |
| Summary / Abstract (Note) | his paper argues that the twin surpluses in China's balance of payments will disappear in the future as a result of external and internal structural changes. China's current account surplus will diminish as a result of the decline in the goods trade surplus, the expanding service trade deficit and negative investment income. China's capital account might shift from surplus to deficit as a result of shrinking net direct investment inflows and more volatile short-term capital flows. When the twin surpluses no longer exist, the normalization of the US treasury bond yields will be sped up, terminating the one-way appreciation of the RMB exchange rate; the People's Bank of China's pressure to sterilize inflows will be alleviated, and new problems for the People's Bank of China's monetary operation will emerge; new financial vulnerabilities for the Chinese economy will arise. Finally, the present paper provides some policy suggestions for the Chinese Government to deal with the declining twin surpluses. |
| `In' analytical Note | China and World Economy Vol. 23, No. 1; Jan/Feb 2015: p.101-120 |
| Journal Source | China and World Economy 2015-02 23, 1 |
| Key Words | China ; Capital Account Liberalization ; Financial Risk ; Twin Surpluses |