Is Chinaʼs Capital Liberalisation Policy Effective?
ABSTRACT Chinaʼs comprehensive administrative system for capital controls and ongoing capital liberalisation are unique features compared with other emerging economies. These allow us to investigate the effects of Chinaʼs capital controls and subsequent liberalisation policies, along with various gl...
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| Format: | Article |
| Language: | English |
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Wiley
2025-01-01
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| Series: | Asia & the Pacific Policy Studies |
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| Online Access: | https://doi.org/10.1002/app5.70005 |
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| author | Lirong Wang Jinnan Zhou C. James Hueng |
| author_facet | Lirong Wang Jinnan Zhou C. James Hueng |
| author_sort | Lirong Wang |
| collection | DOAJ |
| description | ABSTRACT Chinaʼs comprehensive administrative system for capital controls and ongoing capital liberalisation are unique features compared with other emerging economies. These allow us to investigate the effects of Chinaʼs capital controls and subsequent liberalisation policies, along with various global‐push and domestic‐pull factors, on its gross capital flows in a time series analysis. We collect various sources of information on Chinaʼs capital control policies from 2005 to 2022 and construct quarterly time series of Chinaʼs capital control indices for different types of gross flows. Using the bounds tests of cointegration and a conditional error‐correction model, we show that Chinaʼs capital account liberalisation successfully encourages foreignersʼ investments aiming at production to maintain a long‐term relationship with China, as well as their short‐term financial investments to China. On the other hand, Chinese residents increase their long‐term investments overseas during the liberalisation process. However, their portfolio investments abroad are not responsive to the relaxation of capital controls. |
| format | Article |
| id | doaj-art-212029b2463c4f6f905712a4e3d2e32f |
| institution | Kabale University |
| issn | 2050-2680 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Asia & the Pacific Policy Studies |
| spelling | doaj-art-212029b2463c4f6f905712a4e3d2e32f2025-01-31T08:45:15ZengWileyAsia & the Pacific Policy Studies2050-26802025-01-01121n/an/a10.1002/app5.70005Is Chinaʼs Capital Liberalisation Policy Effective?Lirong Wang0Jinnan Zhou1C. James Hueng2School of Economics and Management Northeast Normal University Changchun ChinaSchool of Finance Jilin University of Finance and Economics Changchun ChinaDepartment of Economics Western Michigan University Kalamazoo Michigan USAABSTRACT Chinaʼs comprehensive administrative system for capital controls and ongoing capital liberalisation are unique features compared with other emerging economies. These allow us to investigate the effects of Chinaʼs capital controls and subsequent liberalisation policies, along with various global‐push and domestic‐pull factors, on its gross capital flows in a time series analysis. We collect various sources of information on Chinaʼs capital control policies from 2005 to 2022 and construct quarterly time series of Chinaʼs capital control indices for different types of gross flows. Using the bounds tests of cointegration and a conditional error‐correction model, we show that Chinaʼs capital account liberalisation successfully encourages foreignersʼ investments aiming at production to maintain a long‐term relationship with China, as well as their short‐term financial investments to China. On the other hand, Chinese residents increase their long‐term investments overseas during the liberalisation process. However, their portfolio investments abroad are not responsive to the relaxation of capital controls.https://doi.org/10.1002/app5.70005capital account liberalisationcapital controlsChinaglobal‐push and domestic‐pull factorsgross capital flows |
| spellingShingle | Lirong Wang Jinnan Zhou C. James Hueng Is Chinaʼs Capital Liberalisation Policy Effective? Asia & the Pacific Policy Studies capital account liberalisation capital controls China global‐push and domestic‐pull factors gross capital flows |
| title | Is Chinaʼs Capital Liberalisation Policy Effective? |
| title_full | Is Chinaʼs Capital Liberalisation Policy Effective? |
| title_fullStr | Is Chinaʼs Capital Liberalisation Policy Effective? |
| title_full_unstemmed | Is Chinaʼs Capital Liberalisation Policy Effective? |
| title_short | Is Chinaʼs Capital Liberalisation Policy Effective? |
| title_sort | is china s capital liberalisation policy effective |
| topic | capital account liberalisation capital controls China global‐push and domestic‐pull factors gross capital flows |
| url | https://doi.org/10.1002/app5.70005 |
| work_keys_str_mv | AT lirongwang ischinaʼscapitalliberalisationpolicyeffective AT jinnanzhou ischinaʼscapitalliberalisationpolicyeffective AT cjameshueng ischinaʼscapitalliberalisationpolicyeffective |