The Research On China's Capital Account Liberalization

Along with the constantly development of the globalization of economic and finance, the capital account liberalization has become China's inevitable choices to be involved into the world economy. In the meantime, to locate the resource appropriately, to manage the exchange reservation, to reduce the cost of managing the capital flowing, and to reduce the trade friction, the capital account liberalization is also necessary. In addition, the rapidly developing economy, adequate foreign exchange reserves and strong macroeconomic control ability have made the feasibility of China's capital account liberalization.At present, China's direct investment and portfolio investment restrictions are becoming looser, and the measure of capital account openness also shows that although China's overall level of capital account liberalization is not high, but the trend shows more and more open. Large-scale capital inflowing is the greatest risk China may face under the strong expectation of RMB appreciation. At the same time, China also faces the risk of currency substitution, the conflict of exchange rate policy and monetary policy, and so on. We can get some useful experience from the practice of other countries'capital account liberalization, such as the implementation of "progressive" open, strengthen the management of short-term capital and improve financial supervision. In the end, this paper studies the order of China's capital account liberalization, and explores the specific order from the levels of capital transactions, financial services transactions and foreign exchange transactions. In the mean time, this paper proposes some advices on China'capital account liberalization, such as establish a more flexible exchange rate system, a high risk–resistant financial systems and a more stable financial regulatory system.