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China's Financial Opening Accelerates

Author

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  • Nicholas R. Lardy

    (Peterson Institute for International Economics)

  • Tianlei Huang

    (Peterson Institute for International Economics)

Abstract

Despite predictions by some observers that the United States and China are headed for a “decoupling,” China’s integration into global financial markets is accelerating. Regulatory reform has opened China’s financial market to many US and other foreign financial institutions. Foreign ownership of onshore Chinese stocks and bonds is growing rapidly and is likely to continue to expand in 2021. And inbound foreign direct investment (FDI) is on track to hit a new record in 2020. This integration is very asymmetric, however. China retains relatively tight control over both outbound direct investment and outflows of portfolio capital. US efforts to roll back the trend of deepening financial integration by threatening to delist Chinese companies traded on US markets and prohibiting any US investment in 35 Chinese companies that the Department of Defense alleges to be linked to the Chinese military appear to be largely symbolic.

Suggested Citation

  • Nicholas R. Lardy & Tianlei Huang, 2020. "China's Financial Opening Accelerates," Policy Briefs PB20-17, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb20-17
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    File URL: https://www.piie.com/publications/policy-briefs/chinas-financial-opening-accelerates
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    Cited by:

    1. Marina Zucker‐Marques & Pedro Perfeito da Silva, 2022. "The Role of Institutions: A Cross‐country Analysis of Renminbi Trading in Foreign Exchange Markets," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(3), pages 42-74, May.

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