Research On Risk Prevention Of Cross–border Capital Flow Under China's Capital Account Opening

Expanding the opening of the financial sector to other countries and realizing RMB convertibility have always been important issues in China's financial sector reform.In 1993,the Third Plenary Session of the 14 th Central Committee of the Party first proposed the reform goal of "gradually making the RMB a convertible currency".After China's accession to the WTO in 2001,capital account convertibility began to be put on the agenda.In 2017,the Fifth Meeting of Financial Work and the report of the 19 th National Congress pointed out that we should "improve the financial supervision system and keep the bottom line of no systemic financial risks".At present,it is a basic requirement to realize RMB capital account convertibility not only for reform and opening but also for economic and social development,but it is also faced with many opportunities and challenges.Therefore,it is of great theoretical and practical significance to study these problems.Focusing on cross-border capital flow,this paper does the following work:First,based on world economic theory and the background of the capital account opening and the main line of cross-border capital flow risk,this paper expounds the strategy and necessity of the risk prevention of cross-border capital flow in the opening of capital account.Guided by relevant theories of capital account opening,this paper comprehensively summarizes the current situation of capital account opening and cross-border capital flow in China,and explores the causes of risks.On this basis,a variety of statistical methods are used,and the results show that there is a certain risk of overvaluation of the exchange rate in China,and the market level of the exchange rate needs to be further improved.Cross-border capital inflow has macroeconomic overheating,imbalance in international payments,credit and debt risks,and cross-border capital outflow will increase the risk of capital outflow.After the exchange rate reform in 2005,the pressure index of exchange market fluctuates violently,and the short-term abnormal capital flow will increase the instability of financial market.Second,in order to prevent the risk of cross-border capital flow,an early-warning system for the risk of cross-border capital flows in China was constructed.In order to make preliminary trend prediction of inflow and outflow risks,Granger causality test was used to screen out the early-warning index system of cross-border capital flows and synthesize the early-warning comprehensive index.Then Markov switching vector autoregressive model was used to construct the early-warning model of cross-border capital flows risks.The results show that the early warning index can better predict the risk points and monitor the risk effectively.The early warning model can predict low,medium and high risks and send out early warning signals accurately and timely.Third,cross-border capital flows are international action.Through comparing and analyzing the experience and lessons of successful prevention of cross-border capital flow risk in the capital account opening of foreign developed economies and emerging economies,this paper provides relevant enlightenment and reference for China to prevent and resolve the risk of cross-border capital flow.The results show that the key to preventing the risk of cross-border capital flows is prudent management,the development of the financial system,strengthening the management of expectations and data statistics,strengthening risk warning and using capital controls when necessary.Fourth,in order to prevent the risk of cross-border capital flows effectively,a mechanism has been designed to prevent and resolve the risks in this paper.From "macro-prudential + the regulatory" double pillar framework,we establish a cross-border capital flow risk early warning system,the macro-prudential regulation framework based on inverse cycle regulation and micro regulation framework to crack down on illegal and unfair market.The corresponding measures of capital account opening were put forward from the aspects of the external environment and opening order.Fifth,the innovation of this paper lies in the following aspects: first,it summarized and integrated the formation,transmission and prevention mechanism of cross-border capital flow risk,and provides theoretical support for the organic combination of the policy objectives of capital account opening and preventing systematic financial risks in China.Second,from the perspective of exchange rate,macroeconomic stability,financial system vulnerability and financial crisis,it standardized the formation mechanism and transmission path of cross-border capital flow risk,then provided a clear idea for understanding and preventing cross-border capital flow risk.Third,based on "macro prudential + micro regulatory" rule,a prevention mechanism against the risks of cross-border capital flows was proposed.Based on Markov switching vector autoregressive model,a system of risk early warning was built to predict the risk.In the system,the early warning index can accurately predict the risk points,and the early warning model can sent out early warning signals for low,medium and high risks accurately and timely,which has practical significance to promote China's capital account opening and prevent risks of cross-border capital flows.