Abstract
Firstly, based on the data of international balance of payments, this paper analyzes the current situation of China’s cross-border capital flow, and finds that China’s cross-border capital flow can be divided into two stages due to its differentiated characteristics, and China’s short-term capital outflow pressure is relatively high at this stage. Secondly, in order to better manage cross-border capital flows, this paper sorts out four types of management policies (namely, structural policies, macroeconomic policies, macro-prudential measures, and capital flow management measures), and analyzes the management effects of cross-border capital flows. Finally, the paper puts forward some policy suggestions. 1) The goal of China’s macro-control is to maintain the balance of international payments, and the more foreign exchange reserves we do not pursue, the better. 2) The main objective of strengthening cross-border capital management is to buy time for necessary reforms and adjustments; 3) In the future, China should avoid excessive efforts in daily management of cross-border capital flows.
Highlights
Since the financial crisis, China’s cross-border capital flows can be divided into two stages: in the five-year period from 2008 to 2013, China’s cumulative current account surplus reached $1.40 trillion and net capital inflows reached $1.11 trillion, maintaining a “double surplus” in both the current account and capital ac
In order to better manage cross-border capital flows, this paper sorts out four types of management policies, and analyzes the management effects of cross-border capital flows
In a specific analysis of the drivers of the large cross-border capital inflows in the first phase, developed economies used unconventional monetary policies that led to excessive market liquidity in response to the financial crisis, and excess market liquidity began to flow to emerging economies
Summary
In a specific analysis of the drivers of the large cross-border capital inflows in the first phase, developed economies used unconventional monetary policies (including ultra-low interest rates and quantitative easing) that led to excessive market liquidity in response to the financial crisis, and excess market liquidity began to flow to emerging economies. These monetary policies contributed to the relative widening of the country’s internal and external spreads, which in turn led to the beginning of the upward movement of the RMB exchange rate (di Giovann, 2005). The manufacturing economy fell; the Caixin China Manufacturing Purchasing Managers Index (PMI) most of the time is located below 50; exports: the export situation continues to be weak; the new export orders index for 2018 is 46.6; investment: the investment situation is worrying; in December 2018 investment growth is 5.9%; the growth rate of 1.3 percentage points is lower than the same period last year
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