The globalization of Chinau27s financial sector: Policies, consequences and lessons

摘要

The variety of country experiences with financial sector globalization has precipitated the emergence of a large literature discussing policies, consequences and lessons learned. Chinau27s policies and performance makes an important contribution to this discussion. In contrast to many of its neighbours, China maintains a relatively detailed system of capital controls. During the Asian financial crisis that sent most countries in the region into negative rates of growth, China continued to expand rapidly despite having a financial system that by most objective measures was the worst in Asia. This apparent contradiction has led many researchers to argue that an explanation must lie in Chinau27s usage of capital controls. This paper first reviews the policies that China has undertaken toward the globalization of its financial sector. The consequences of these policies are then summarised and policy implications are drawn for other countries embarking upon the path of financial sector globalization. It is emphasized that while China makes extensive use of capital controls, many have readily been circumvented resulting in considerable de-facto external financial liberalization. Therefore, the claim that capital controls are the reason behind Chinau27s impressive growth performance should not be over-stated.