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

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  • Chen, Jinzhao
  • Qian, Xingwang

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 contrast 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 resident and nonresident asset transactions. Understanding that China usually implements policies in a step by step gradualist style, we extract this 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

  • Chen, Jinzhao & Qian, Xingwang, 2016. "Measuring on-going changes in China's capital controls: A de jure and a hybrid index data set," China Economic Review, Elsevier, vol. 38(C), pages 167-182.
  • Handle: RePEc:eee:chieco:v:38:y:2016:i:c:p:167-182
    DOI: 10.1016/j.chieco.2016.01.002
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    Citations

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    Cited by:

    1. 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.
    2. 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.).
    3. 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.
    4. repec:wsi:serxxx:v:62:y:2017:i:04:n:s0217590817400318 is not listed on IDEAS
    5. 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.

    More about this item

    Keywords

    Capital flows; China's capital controls; De jure index; Hybrid index;

    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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