Reaserch On Coordinate Theory Of China’s Capital Account Liberalization

Capital account liberalization is an inevitable choice of the countries in the open world economy. But it is also a complex economic process,closely related with other economic factors,having a profound impact on a country’s overall economic development. In the large number of domestic and foreign literatures, Asian financial crisis serves as a dividing point, before the crisis, the mainstream view is that domestic financial sector reform and other domestic financial institutions and markets develop before the liberalization of the capital account. After the outbreak of the crisis, the economics profession begin to emphasize the great importance of the financial system of a country on capital account liberalization, capital account liberalization will encounter risks with the flawed financial system. There are also a very small number of scholars have proposed that capital account liberalization is an integral part of a country’s overall economic strategy, that the reform sequence of capital account liberalization and other economic reforms does not matter, and it should be based on the actual economic situation of a country and coordinate development. However, experts and scholars in the world do not give theoretical basis of this view, leading to the serious gap between theory and practice of capital account, especially in China’s economic circles, there are scattered bits and pieces of voices that capital account liberalization and other economic policies can complement each other in practice,but they insist domestic financial sector reform and other domestic financial institutions and markets develop before the liberalization of the capital account in theory.The reason lies in the lack of theoretical basis of the coordinate theory, and nearly all the empirical studies are used to prove "order theory" of capital account liberalization, and there are no empirical studies on coordinate throry’s. In early 2012, the currently Director-General of the Department of Statistics & Analysis in the Peoples’s Bank of China, Sheng Songcheng is the first person in the world who gives the research from the thoretical basis and practical operation of coordinate development of China’s capital account liberalization, fills in the world’s economic blanks, makes great contributions to the international economic circles. Since then, domestic scholars abandon the order theory, More and more experts and scholars agree on coordinate theory. At present, the China’s capital account liberalization coordinate theory has become national policy, and points out the direction for the promotion of China’s financial reform forward. In the next few years, China will promote futher reform of interest rates marketilization, exchange rate formation mechanism and capital account liberalization,etc.The thesis focuses on empirical study,and tries to give the detailed theoretial study and a series of empirical model system to demonstrate the coordinate theory of China’s capital account liberalization.Chapter 1 is an introduction of background, significance, the literature review of this study, the main objectives structural arrangements and technical roadmap.Chapter 2 introduces the difinatiori, classification and Coordinate factors of coordinate theory of capital account liberalization, China’s policy conflicts under the existing capital controls and the necessity of coordinate theory; describes the limitations of parity theory and the theory of Mundell impossible trinity on China’s situation,and also China’s empirical study on Mundell impossible trinity.Chapter 3 is to coordinate the Chinese interest rates, exchange rates, financial development and other economic factors and capital account liberalization, introduces the three variables’(China’s interest rate, exchange rate and capital account liberalization) mechanisms and coordination system, influence on effectiveness between capital account liberalization and monetary policy instruments, necessity and the existing problems of coordination between China’s financial development and capital account liberalization,and gives the detailed introduction of coordinated economic factors.Chapter 4 is the empirical study, that is OLS and VAR model of China’s financial development and capital account liberalization, and China’s interest rates, exchange rates and capital account liberalization’s SVAR and VAR model with the static and dynamic data,and last is the related economic variables’panel modelChapter 5 is China’s capital account liberalization countermeasures and suggestions,that is, to strengthen international cooperation on capital account management with flowing in and flowing out, Appropriately to speed up China’s capital account liberalization, interest rate market reform, the exchange rate market reform, in line with the foreign capital policy, industrial policy, the transformation of government functions, the effective management of foreign exchange reserves, and to strengthen financial regulation and other policies, thus coordinately promoting China’s capital account.