Corpus ID: 16514489. China needs capital controls to retain monetary-policy independence until a freely floating exchange-rate regime is put in place. Introduction . Such an approach would guide China to adopt a carefully sequenced and cautionary approach to capital account liberalization. China has a goal of achieving capital account convertibility (and a market-determined exchange rate) for the Renminbi by 2020. For a country with an open capital account, a perceived deterioration in its policy environment could be punished by domestic and foreign investors, who could suddenly take capital out of the country. 2018-10 | May 2020. Lawrence J. Lau. The papers in this volume were prepared for a BIS/SAFE seminar of central bankers, scholars and market participants held in Beijing on 12-13 September 2002. Capital account liberalization may also be interpreted as signaling a country’s commitment to good economic policies. May 2015 . Capital account convertibility means the absence Author(s): Zheng Liu, Mark M. Spiegel, and Jingyi Zhang China maintains tight controls over its capital account. The main message is that China would do well to draw lessons from both the economics literature and country experiences with capital account liberalization. More Working Papers. Third, with insufficient protection of property rights and corruption still pervasive despite the government's determination to curb it, capital account liberalization would encourage capital flight and money laundering. Direct benefit: capital account liberalization as an end in itself Open capital account offers better benefit-risk tradeoff for DMs than for EMs “Threshold” effect: opening-up may be increasingly favorable for China over time (Kose, Prasad & Taylor 2009, Wei 2018) 1. China’s RMB Internationalization Strategy and Capital Account Liberalization China has launched a number of policy initiatives since June 2009 to promote the international use of its currency, the renminbi (RMB), as an approach to reduce the country’s reliance on the US dollar. Capital Account Liberalization in China . On the other hand, however, capital market liberalization, especially that of short-term capital flows, can add to instability within the financial system. Regionalization of the RMB and China ’ s Capital Account Liberalization @inproceedings{Li2004RegionalizationOT, title={Regionalization of the RMB and China ’ s Capital Account Liberalization}, author={J. Li}, year={2004} } capital. China’s capital account liberalisation: international perspectives Monetary and Economic Department April 2003 . The views expressed are those of the Capital account liberalization also provides an opportunity for a country’s currency to be accepted outside its borders, making trade transactions easier and less costly. Global Implications of Capital Account Liberalization in China’, International Monetary Fund Working Paper No 13/189. These findings suggest that the renminbi real exchange rate would not be particularly sensitive to capital account liberalization as capital … Overall, China would continue to be a net creditor, with the net foreign asset position as a share of GDP remaining largely stable through this decade. 1. Optimal Capital Account Liberalization in China. Chan S (2017), ‘Assessing China's Recent Capital Outflows: Policy Challenges and Implications’, China Finance and Economic Review , 5(3).