Capital Account Opening And The Choice Of RMB Exchange Rate Policy

It is inevitable for China to open its capital account if it wants to play a significant role in the world economy and new finance system as a great power. And China's entry into WTO boosts its capital liberalization. In fact, officials and academics alike have achieved the common sense that the significance of capital account opening speaks for itself. On this ground, it is an important topic for us to research how to maximize the use of external resource for domestic economic development and how the RMB exchange policy to push on capital account liberalization. However, the discussion of how to realize China's capital account liberalization step by step ha not been in one mind. Meanwhile, the persistent growth of the world economy, the advancement of science and technology and many other factors have brought great changes in the international financial market in the form of economical globalization. The economic and financial crises that appear frequently these years also call for our attention to consider capital account liberalization in depth, and this dissertation is written under such a background in order to study the China's capital account and choice of RMB exchange policy. There are two important macroscopic regimes in the opened economy, one is which exchange regime to adopt, and another is which management mode to adopt for the capital inflows and outflows. Now China has achieved opening the current account, but it still controls its capital account strictly, and it adopts the managed flexible exchange rate (now it is deemed to Fixed Rate). According to the "Triple Paradox"of M-F mode, the capital flow, interest rate stability and fiscal policy independence, there can be two of them. Along with the opening capital account in China, in order to guarantee the independence and availability of Chinese exchange regime, Chinese exchange regime must convert into Floating Rate. Furthermore, the level of RMB exchange and the degree of liberalization of RMB also have to adjust to the opening of the capital account. The methodology of the dissertation is to combine theoretical innovation and actual practice, international experience and domestic situation, and theoretical and analysis and empirical study. Then based on the review and comparison of existing theories, the dissertation examines the special restriction posed by a non-internationalized currency, and the degree of international acceptance of a target and the sequencing of capital account liberalization. Finally, we give some countermeasures on the choice of RMB exchange policy.