Dysfunctional financial market theory

51Due教员组给各位留学生分享一篇纯原创代写范文essay，本文旨在正确分析中美贸易失衡背后的真实原因，为双方解决当前争端、避免损失扩大提供更好的建议。如何正确处理中美贸易不平衡是本文研究的问题。本文也在针对中美存在的问题，提出了两个理论假设，即功能失调的金融市场理论和激进的产业政策理论。通过这两种理论，我们可以验证贸易失衡背后的真正原因。

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Motivation of the article. This paper aims to correctly analyze the real reasons behind the trade imbalance between China and the United States, so as to provide better suggestions for the two sides to resolve the current disputes and avoid the expansion of losses.  

The researchable problem studied in this paper is how to correctly deal with the trade imbalance between China and the United States. With the development of China's economy, China has become the second largest economy in the world, with huge foreign exchange reserves. At the same time, the long-term trade imbalance between China and the United States has caused many disputes. The US blamed China's trade imbalance on currency manipulation. Therefore, in view of these problems, the paper puts forward two theoretical hypotheses, the dysfunctional financial market theory and the radical industrial policy theory. Through these two theories, we can verify the real reasons behind the trade imbalance.

This article cites the literature to be used as the source of the specific theory.

Theoretical foundation. Through the analysis of the dysfunctional financial market theory and radical industrial policy theory, this paper finds the real reasons behind China's trade imbalance. Due to the insufficient government investment in medical and other infrastructure, the residents' expectations of future cost of living have been raised, spot consumption has been reduced and private savings have been increased, thus resulting in insufficient domestic demand and excess savings. At the same time, because social savings are larger than investment, it is a common phenomenon that Chinese capital is idle and the utilization rate of funds is low. Under the guidance of national industrial policy, social investment is mostly used to produce low value-added export products, and underinvestment in high technology and high value-added industries, while the United States only imports low value-added products from China, thus exacerbating trade imbalances. In addition, the imperfect financial market led to the escape of private enterprises, resulting in an increase in exports. According to the radical industrial policy theory, the Chinese government has adopted a number of supporting measures to encourage exports to earn foreign exchange. This policy orientation has stimulated China's export-oriented enterprises. And in order to protect its own enterprises, it has imposed strict controls on imports. As a result, the trade imbalances occur.

This paper mainly uses case analysis method to conduct empirical research. Case study method can deeply analyze the causes of the problem and is easy to understand by readers. But the results of case study can not be summarized as general conclusions, because it is not rigorous. But the author has not dealt with this problem very well. Many conclusions are not universal and can only be said to have some reference significance. For example, with regard to the impact of the appreciation of the Japanese exchange rate on the United States, the author concludes that the exchange rate issue does not have much impact on the United States, but this conclusion is not universal.

The data used in this paper are time series data and national level data. The data sources are the primary ones. These data are suitable for the needs of this study. the author analyzes the data to explain the trade imbalance between China and the United States, and finally comes to the conclusion that China's trade surplus persists and the RMB is indeed undervalued.

The final findings of this paper show that trade war is not desirable for both sides in the long run. Trump should actively innovate American enterprises’ innovative technology, rather than stop the process of globalization. For China, it should relax controls and actively build a favorable investment environment for foreign investors.

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The study of the relationship between exchange rate and trade balance has always been an important subject in the field of international trade, and the theoretical circle has made a lot of achievements. Among them, a general view is that when the Marshall-Lerner condition is met, that is, when the import and export elasticity is greater than 1, the devaluation of a country's currency will lead to increased exports and reduced imports. Currency appreciation will lead to a decrease in exports and an increase in imports. We can use these two conclusions as presuppositions.

The selection of variables. For trade between two countries, the level of domestic import demand (IM), as a dependent variable, is theoretically determined by such factors as domestic income level, domestic price level, price level of trading countries and nominal exchange rate (these factors are explanatory variables). Conversely, factors such as the income level of the trading country, the price level of the trading country, and the domestic price level and nominal exchange rate (these factors are explanatory variables) will affect the export level of the trading country (EX) (as dependent variables). The selection of models is a general econometric model. This paper focuses on whether the trade imbalance between China and the United States is affected by the fluctuation of the RMB exchange rate. Empirical data selected from 1981 to 2017. Among them, China and the United States import and export data, as well as China's national income and GDP data are from the China Statistical Bureau; the United States national income data and GDP data are from the United States Department of Commerce; the real exchange rate is calculated through the nominal exchange rate of RMB against the United States dollar.

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