| The long-term objective of the reform of foreign exchange administration system in China is to realize the convertibility of Renminbi capital account on the basis of current account convertibility. Renminbi capital account liberalization is the necessary choice for China to join the international economy. The theory and experience of international capital flow demonstrate that capital account liberalization is a double-side sword, which can both bring new opportunities for China to join the international economic environment and financial risks in capital market. So it will be cautious for the issue of capital account convertibility, and we should make ample preparation for it.Chapter one: The connotation and importance of capital account convertibility. There is not an organization which can have jurisdiction over capital account convertibility of all the counties in the world, and the theorists and the practical realm also have different understanding about the capital account convertibility and they have not widely acceptable definition about capital account convertibility, so the paper enumerates several representative viewpoints and briefly elaborates necessity of capital account convertibility from three aspects.Chapter two: The present situation of capital account convertibility in China. This chapter mainly includes following four aspects: Firstly, it is the history about current account convertibility. In 1994, our country implemented foreign exchange administration system reform, established the system which completes buying and selling foreign exchange through bank, and conditionally realized Renminbi current account convertibility. After three years practice, in December1996, our Government announced to accept No.8 provision of the International Monetary Fund agreement, and realized the Renminbi current account convertibility. Secondly, it is the opening of the foreign direct investment (FDI). From the present situation in our country, the foreign direct investment (FDI) is controlled by Foreign Investment Industry Guidance Catalogues which jointly issued by National Development and Reform Commission and Commerce Department. From the perspective of foreign exchange management, capital inflows of FDI have not been controlled. Thirdly, it is the opening of commercial credit. Our country has restrictions on the foreign loan, but they are just normative measures under the prudential principles. Finally, it introduces the opening of securities investment. Securities investment in our country has been gradually opening to the outside world, the limit has been cancelled gradually. For example, the qualified foreign investment institutions have been permitted to enter A-share market, simultaneously, the domestic residents have been permitted to invest in foreign stock market through the Authorized foreign exchange banks and eligible Insurance Company has been permitted to use own foreign exchange to invest offshore financial products.Chapter three: The effectiveness of present capital management policies in our country. This chapter mainly includes following four aspects: Firstly, it is the effectiveness of FDI management policies. On one hand, capital inflow of FDI plays an important role on making up for domestic fund shortage and promoting economic growth. One the other hand, defects still exit in exercise of FDI management policies. For example, the restraint on the Chinese-invested enterprises under the macroeconomic regulation is obviously bigger than the Foreign-funded enterprises. Some policies such as credit policy are difficult to restrict Foreign-fund enterprises effectively. Because the development between foreign economic departments and the domestic related departments lack coordination, that weakens the macroeconomic regulation and control validity. Secondly, it is about effectiveness of commercial credit policies. On one hand, our country foreign loan is in the controllable scope, compared with the foreign exchange reserve scale, and so the foreign loan risk is low. On the other hand, the control measures can only be effective in a short time, the market economy main body will use many ways to avoid control measures after they are familiar with management rules, so the weak link of policies is badly to be resolved. Thirdly, it is about effectiveness of capital securities transaction policies. Our country has maintained the cautious attitude on capital securities transaction and preferred outflow of capital securities based on imperfect domestic market. Finally, it is about effectiveness of capital outflow. Capital outflow management in our country has obviously effective results. Since 2002, our country has sustained double surplus, capital inflow is swift and violent, and the managing model of"Easily in, strictly out"has been adjusted. In 2003, our country started to relax restrictions on overseas investment, and implemented going-out strategy.Chapter four : Comparison between costs and benefits of capital account convertibility. On one hand, the capital account convertibility can accelerate the process of market, improve the efficiency of resource distribution, stabilize macroeconomic, and maintain the international balance of payments. On the other hand, capital account convertibility can also bring some drawbacks, such as the possible loss of the independence of monetary policy, enhancing knock-on effect of inflow of hot money, easily being effected by global economic cycle, and making domestic financial institutions to face global competition pressure.Chapter five: Institutional arrangement of Renminbi capital account convertibility. This part composes of three parts: Firstly, it is about realizing general goal of Renminbi capital account convertibility. The goal is that under effective guard risk premise, it will relax limits on the interstate capital transaction gradually in order to realize capital account convertibility. Secondly, it is about coordination of each kind of policy during the process of realizing capital account convertibility. This part mainly elaborates the importance of each kind of policy coordination from following angles, and they are the exchange rate formation mechanism reform, macroeconomic policy mix and relations between foreign exchange market and the securities market。Finally, it is about how to prevent risks. Regarding possible risks and uncertainty that we may meet, the bank, the enterprise and the supervisory department should make a lot to prevent risks early.Chapter three elaborates effectiveness of capital project management policies. This chapter mainly includes four aspects: Firstly, it is about effectiveness of FDI managing measures. On one hand, foreign capital inflow plays an important role in making up for domestic fund shortage and promoting economic growth. On the other hand, there are still some defects in exercise of FDI policies.窗体顶端... |
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