Chinese Capital Flows and Capital Account Liberalisation

Eden Hatzvi, Jessica Meredith and William Nixon
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Eden Hatzvi: Reserve Bank of Australia
Jessica Meredith: Reserve Bank of Australia
William Nixon: Reserve Bank of Australia

RBA Bulletin (Print copy discontinued), 2015, 39-48

Abstract: Chinese private capital flows are dominated by foreign direct investment and banking-related flows, with portfolio flows remaining relatively small (as a share of GDP). Of these components, banking-related flows account for the majority of the cyclical variation in total flows and seem to be driven by expected changes in the exchange rate. Both the composition of capital flows and the factors that drive their variation are likely to change as the Chinese authorities gradually open the capital account in line with their stated intention. Given the size of China’s economy, the implications of a continued opening of its capital account and a significant increase in capital flows are potentially very large. They include a greater influence of global financial conditions on China (and vice versa), a change in the composition of China’s net foreign assets, and a change in the nature of the economic and financial risks facing China.

Keywords: Chinese Capital Flows; Financial Liberalisation, Direct Investment; Chinese Banking Flows; Renminbi Exchange Rate; Renminbi Internationalisation; Global Financial Integration; Capital Account Liberalisation; Renminbi; RMB; China; Chinese Portfolio Flows; RMB Expectations; China’s Balance of Payments (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (8)

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