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Measuring the on-going changes in China's capital controls: A de jure and a hybrid index data set

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  • Jinzhao Chen

    (ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand, CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne)

  • Xingwang Qian

    (Economics and Finance Department, SUNY Buffalo State, Buffalo, NY)

Abstract

Liberalizing China's capital account controls may have profound implications for the RMB exchange rate, monetary policy autonomy, and Chinese economy. However, rigorous studies on the importance of China's capital controls are limited, primarily due to the scarcity of proper measurements of China's capital controls. In this paper we create a new data set of indices including de jure and hybrid measurements of the changes in China's capital controls. In contrasting to other capital control indices that are compiled in a yes-or-no style, we quantify the intensity of changes in China's capital controls. Our indices reveal a persistent but uneven process of capital account liberalization in China between 1999 and 2012. This paper describes the de jure and hybrid indices, including indices for capital controls on individual asset categories, gross flows, inflows and outflows, as well as for residents and nonresidents asset transactions. Understanding that China usually implements policies in a step by step gradualist style, we extract those gradual information from the text in the IMF's Annual Report on Exchange Arrangement and Exchange Restrictions (AREAER) and some supplementary material from other sources.

Suggested Citation

  • Jinzhao Chen & Xingwang Qian, 2016. "Measuring the on-going changes in China's capital controls: A de jure and a hybrid index data set," Post-Print hal-03727640, HAL.
    • Handle: RePEc:hal:journl:hal-03727640
    Note: View the original document on HAL open archive server: https://hal.science/hal-03727640
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    References listed on IDEAS

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    Cited by:

    1. Wang, Lirong & Zhou, Jinnan & Hueng, C. James, 2022. "Dynamics of gross capital flows and financial stress in China," Finance Research Letters, Elsevier, vol. 44(C).
    2. Mohammad Farhad & Michael Jetter & Abu Siddique & Andrew Williams, 2018. "Misreported Trade," CESifo Working Paper Series 7150, CESifo.
    3. Mario Cimoli & Jose Antonio Ocampo & Gabriel Porcile & Nunzia Saporito, 2020. "Choosing sides in the trilemma: international financial cycles and structural change in developing economies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 29(7), pages 740-761, October.
    4. Yin-Wong Cheung & Cho-Hoi Hui & Andrew Tsang, 2017. "The RMB Central Parity Formation Mechanism after August 2015: A Statistical Analysis," Working Papers 062017, Hong Kong Institute for Monetary Research.
    5. Cheung, Yin-Wong & Steinkamp, Sven & Westermann, Frank, 2016. "China's capital flight: Pre- and post-crisis experiences," Journal of International Money and Finance, Elsevier, vol. 66(C), pages 88-112.
    6. Anna Wong, 2017. "China’s Current Account : External Rebalancing or Capital Flight?," International Finance Discussion Papers 1208, Board of Governors of the Federal Reserve System (U.S.).
    7. Yu, Shu & Qian, Xingwang & Liu, Taoxiong, 2019. "Belt and road initiative and Chinese firms' outward foreign direct investment," Emerging Markets Review, Elsevier, vol. 41(C).
    8. Paul De Grauwe & Zhaoyong Zhang & Rod Tyers, 2016. "Slower Growth and Vulnerability to Recession: Updating China's Global Impact," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(1), pages 66-88, February.
    9. Kitano, Shigeto & Zhou, Yang, 2022. "Effects of China’s capital controls on individual asset categories," Finance Research Letters, Elsevier, vol. 49(C).
    10. Bo Zhang & Jinyan Hu & Mingming Jiang & Feng Guo, 2017. "Monetary Shocks And Stock Market Fluctuations: With An Application To The Chinese Stock Market," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(04), pages 875-904, September.
    11. Cheung, Yin-Wong & Hui, Cho-Hoi & Tsang, Andrew, 2018. "The RMB central parity formation mechanism: August 2015 to December 2016," Journal of International Money and Finance, Elsevier, vol. 86(C), pages 223-243.
    12. Li, Dongkun & Chen, Xiaohong & Wohlfarth, Paul, 2022. "Public participation, investment networks, and China's outward FDI: Evidence from 58 countries along the belt and road," Emerging Markets Review, Elsevier, vol. 51(PB).
    13. Xing Zhou & Quan Guo & Ming Zhang, 2021. "Impacts of OFDI on Host Country Energy Consumption and Home Country Energy Efficiency Based on a Belt and Road Perspective," Energies, MDPI, vol. 14(21), pages 1-25, November.
    14. Niemeläinen, Julia, 2023. "China's macroeconomic policies and spillover effects," BOFIT Discussion Papers 5/2023, Bank of Finland Institute for Emerging Economies (BOFIT).
    15. Hongfeng Peng & Jingwen Yu, 2021. "Absorptive capacity and quality upgrading effect of OFDI: Evidence from China," Pacific Economic Review, Wiley Blackwell, vol. 26(5), pages 651-671, December.
    16. Zhitao Lin & Jinzhao Chen & Xingwang Qian, 2022. "Capital controls and the volatility of the renminbi covered interest deviation," Review of International Economics, Wiley Blackwell, vol. 30(1), pages 205-236, February.

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    More about this item

    Keywords

    Capital flows; China's Capital Controls; de jure index; hybrid index;
    All these keywords.

    JEL classification:

    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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