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Regional Capital Mobility in China: 1978-2006

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  • Yan, Isabel K.
  • Chan, Kenneth S.
  • Dang, Vinh Q.T.
  • Lai, Jennifer T.

Abstract

We examine cross-region capital mobility in China and track how the degree of mobility has changed over time. The effects of fiscal and redistributive activities of different levels of government in China on private capital mobility are taken into account. Our results indicate that there was a significant improvement in capital mobility over time in China, particularly for private capital in the more developed regions. The central and provincial governments, via their taxation, spending, and transfers, loosen the relationship between private saving and investment and appear to promote capital mobility, particularly for less developed regions. There are considerable differences between more and less developed regions in terms of the degree of capital market integration and the improvement in capital mobility over time. The results have important policy implications on global re-balancing as well as regional development gap and risk-sharing within China.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35217.

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Date of creation: Aug 2011
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Handle: RePEc:pra:mprapa:35217

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Keywords: Feldstein-Horioka; Chinese cross-region capital mobility; saving-investment relationship; Chinese capital market integration;

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Cited by:
  1. Lai, Jennifer T. & McNelis, Paul D. & Yan, Isabel K.M., 2013. "Regional capital mobility in China: Economic reform with limited financial integration," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 493-503.
  2. Andersson, Fredrik N. G. & Edgerton, David & Opper, Sonja, 2011. "A Matter of Time: Revisiting Growth Convergence in China," Working Papers 2011:23, Lund University, Department of Economics, revised 01 Mar 2012.
  3. He , Qing & Xue, Chang & Zhu, Chenqi, 2014. "Financial development and patterns of industrial specialization: Regional evidence from China," BOFIT Discussion Papers 12/2014, Bank of Finland, Institute for Economies in Transition.

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