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Measuring the On-Going Changes in China's Capital Flow Management: A De Jure and a Hybrid Index Data Set

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  • Jinzhao Chen

    (The University of Hong Kong)

  • Xingwang Qian

    (SUNY Buffalo State and Hong Kong Institute for Monetary Research)

Abstract

Liberalizing China's capital account may have profound implications for the RMB exchange rate, monetary policy autonomy, and Chinese and the world economy. Owing to the scarcity of proper measurements of China's capital controls, rigorous studies on the effectiveness and implications of China's capital controls are limited. We contribute to the literature by creating a new data set of indices including de jure and hybrid measurements of the changes in China's capital controls, hoping to inspire a new avenue of research in this area. 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 lines of 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, 2015. "Measuring the On-Going Changes in China's Capital Flow Management: A De Jure and a Hybrid Index Data Set," Working Papers 112015, Hong Kong Institute for Monetary Research.
  • Handle: RePEc:hkm:wpaper:112015
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    Cited by:

    1. Mohammad Farhad & Michael Jetter & Abu Siddique & Andrew Williams, 2018. "Misreported Trade," CESifo Working Paper Series 7150, CESifo.
    2. 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.
    3. 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.
    4. 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.).
    5. 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).
    6. 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.
    7. 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.
    8. 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.

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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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