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Macro-financial Linkage and Financial Deepening in China after the Global Financial Crisis

Author

Listed:
  • Kumiko Okazaki

    (Director and Senior Economist, Deputy Head of Planning and Coordination Group, Economic and Financial Studies Division, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: kumiko.okazaki@boj.or.jp))

  • Tomoyuki Fukumoto

    (Associate Director-General, Head of Planning and Coordination Division, International Department, Bank of Japan (E-mail: tomoyuki.fukumoto@boj.or.jp))

Abstract

As China's economic integration with the global economy deepens, the amount of capital flow to/from China has been increasing significantly, especially since it joined the WTO. In spite of such environment, the recent global financial crisis has not severely affected the Chinese financial markets because of China's relatively strict control of cross-border capital transactions and its strong economic and financial fundamentals. The government's stimulus policies worked effectively to realize a quick recovery of the country's economic growth. However, on the horizon, the factors that protected the Chinese economy during the crisis also seem to carry with them substantial risks and challenges to its sustainable growth. This paper reviews the factors that have kept the Chinese economy and financial markets relatively stable and analyzes the recent changes in China's macro financial linkage overseas, and highlights the challenges that China faces in realizing a sustainable and efficient economic development.

Suggested Citation

  • Kumiko Okazaki & Tomoyuki Fukumoto, 2011. "Macro-financial Linkage and Financial Deepening in China after the Global Financial Crisis," IMES Discussion Paper Series 11-E-02, Institute for Monetary and Economic Studies, Bank of Japan.
    • Handle: RePEc:ime:imedps:11-e-02
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    Citations

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    Cited by:

    1. Duc Hong Vo & Anh The Vo & Chi Minh Ho, 2020. "Does Financial Integration Enhance Economic Growth in China?," Economies, MDPI, vol. 8(3), pages 1-18, August.
    2. Miao Han, 2012. "The People's Bank of China during the global financial crisis: policy responses and beyond," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(4), pages 361-390, August.
    3. Ichiro Otani & Tomoyuki Fukumoto & Yosuke Tsuyuguchi, 2011. "China's Capital Controls and Interest Rate Parity: Experience during 1999 - 2010 and Future Agenda for Reforms," Bank of Japan Working Paper Series 11-E-8, Bank of Japan.

    More about this item

    Keywords

    Macro-financial Linkage; Financial Deepening; Cross-border Capital Flow; Bank Lending;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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