The Composition of The Global Flow of Funds in East Asia Nan Zhang The 11th International Conference of Northeast Asian Area August 19-20, 2004, Chang.

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The Composition of The Global Flow of Funds in East Asia Nan Zhang The 11th International Conference of Northeast Asian Area August 19-20, 2004, Chang ｃｈ un, China

Contents The Outline of Analysis Pattern of International Fund Flows in 1990s A Doubtful Circle in East Asia Problems and Future Prospects

The Outline of Analysis The Balance of Savings-Investment Financial Surplus or Deficit Current Account S - I = △Ａ - △Ｌ ＝ EX - IM

The Balance of Overseas Income and Expenditures Current account surplus= (fund outflow - fund inflow) + foreign exchange reserves EX - IM = （ FO - FI ） + FER

The Balance of Financial Markets Domestic fund outflow+overseas fund outflow+ foreign exchange reserves =Domestic fund inflow+ overseas fund inflow DFO + OFO + FER ＝ DFI + OFI The equation above is changed as follows OFO - OFI + FER ＝ DFI - DFO

Balance of Overseas Fund Supply (Net fund supply to overseas) NOFO + FER (Capital account deficit) = NDFI (Increase in domestic financial assets)

Patterns of International Fund Flows in the 1990s US Investment Boom: US Investment to Emerging Market A Doubtful circle: The Returns of Fund Flow to US From The Developing Country

The Current Account of The Advanced Country (US$ billions) Data:IMF,World Economic outlook, April 2004

External Flow of Funds in US (US$ billions) Data: FRB, Flow of Funds Accounts of the United States

External Financing of Emerging Market (US$ billions) Data: IIF, Capital Flows to Emerging Markets Economies, 2003

A Doubtful circle in East Asia Excessive Fund Flows A Doubtful Circle

Balance of Savings-Investment in East Asia (Percent of GDP) Date: “ Asian Development outlook 2004 ”

Changes in The Current-Account in East Asia (Percent of GDP) Date: “ Asian Development outlook 2004 ”

The Financial Form of The Current Deficit of Developing Asia (US$ billions) Data: IMF, World Economic outlook, May 2003

The Overseas Fund Flows in China A Doubtful Circle in China Net Fund Outflows to Overseas

Overseas Fund Flows in China (100 million RMB) Data: The People ’ s Bank of China Quarterly Statistical Bulletin,

The Flow of Funds in China (The average of , 100 million RMB)

Problems and Future Prospects The Difference in “ A Doubtful Circle ” in East Asia Create the Environment for Stabilized Fund Flows

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