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Managing Capital Flows : The Case of the People’s Republic of China

Author

Listed:
  • Yongding Yu

    (IWEP, ABDI)

Abstract

The relatively successful management of cross-border capital flows has enabled the Peoples Republic of China (PRC) to achieve an extremely high average growth rate of more than 10 percent while keeping inflation under control. The management of cross-border capital flows is an indispensable element of macroeconomic stability. In order to cool down the overheating economy, the PRC government will continue to implement a tight monetary policy. In the face of possible further cuts in US interest rates, the PRCs monetary tightening is becoming increasingly difficult. Hence, the PRC must maintain capital controls whenever possible, and improve its management of cross-border capital flows, to enable the Peoples Bank of China (PBOC) to implement an independent monetary policy to sustain the economys growth into the next decade.

Suggested Citation

  • Yongding Yu, 2008. "Managing Capital Flows : The Case of the People’s Republic of China," Finance Working Papers 22833, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:financ:22833
    as

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    File URL: http://www.eaber.org/node/22833
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    References listed on IDEAS

    as
    1. Mr. Eswar S Prasad & Raghuram Rajan, 2005. "Controlled Capital Account Liberalization: A Proposal," IMF Policy Discussion Papers 2005/007, International Monetary Fund.
    2. Yu Yongding, 2007. "Global Imbalances and China," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 40(1), pages 3-23, March.
    3. Jang-Yung Lee, 1996. "Implications of a Surge in Capital Inflows: Available tools and Consequences for the Conduct of Monetary Policy," IMF Working Papers 1996/053, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Liu, Yan & Chang, Hsu-Ling & Su, Chi-Wei, 2013. "Do real interest rates converge across East Asian countries based on China?," Economic Modelling, Elsevier, vol. 31(C), pages 467-473.

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    More about this item

    Keywords

    capital flows; China; monetary policy; macroeconomic stability;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications

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