Capital Control And Choice Of Exchange Rate System Of RMB In The Process Of Capital Account Convertibility Of China

With the process of integration of world economy and globalization of financial system, more and more countries, including many developing ones, have realized currency convertibility, which plays a more and more important role in enhancing efficiency of capital allocation and eliminating huge administration expense arising from exchange control.China has been successfully realized convertibility of RMB in current account since 1996, which means our country has formally joined multilateral payment system of international trade and relieved foreign exchange control to a great extent. However, for many reasons, our country also implement strict capital control. With entry into WTO in 2001, our country will be much more open to outside, and the capital account inconvertibility of RMB has become a key restricting factor to be more open to outside. Moreover, the trend of releasing regulation of capital account worldwide makes it much imperative to release capital account control and realize the full convertibility of RMB step by step. To realize convertibility of RMB in capital account has become an important issue we must face.How to use international experience for reference, grasp the basic characteristic of china's economy and finance , thus preventing or lessening the outside shock due to full convertibility of RMB and benefiting from free flow of capital greatly is a quite important issue. Capital control and exchange rate system are the two key issues in the process of capital account convertibility of RMB. That is why we discuss the issue of RMB convertibility together with exchange rate system, which is in fact the main characteristic of this thesis. First, we study general theory in this field, and then make a thorough research on capital control and exchange rate system of RMB, finally we make analysis and judgement on the timing and process of capital account convertibility of RMB. This paper consists of five chapters. The first one is introduction. In this chapter, we mainly discuss the value of this thesis, make literature summarization and analyze innovation and study method of this paper. In the second chapter, we make a comprehensive review of general conception and theory of currency convertibility. In Chapter Three, we thoroughly discuss exchange rate system of RMB, which has a close relation with convertibility of RMB in capital account. We make a thorough research on the choice of exchange rate system of RMB in the process of capital account convertibility of RMB. In the final chapter, we use case study and empirical method to analyze the theoretical and practical issue of capital account convertibility of RMB, discuss the order and timing of capital account convertibility of RMB and also make some policy suggestion.