Research On International Short-term Capital Flows In China

Since the late 1980's, due to the integration of global economy and financial, most countries especially the emerging market countries have relaxed the capital control and accelerated the process of the financial liberalization, which causes tremendous number of flows of international short-term capital. The international short-term capital promoted the economic growth in those counties; on the contrary, it led the unprecedented impact to them, such as inflationary pressures, real exchange rate appreciation, and overheating in economy. As to the developing countries with fragile financial systems and high ratio of short-term foreign debits, sudden reversal flows can lead to great loss. As the largest developing country, on the one hand, we should push on the process of the RMB internalization, built a foreign exchange reserves system of diversity, and complete the exchange rate regime, on the other hand, with the growth of our economy opening degree, we have to improve the efficiency of the of international short-term capital control.From two sides of capital flight and short-term capital inflow, this dissertation will discuss the characteristics, and rule of the international short-term capital flows, and the present situation of the flows and the regulation of the international short-term capital in china, at last it comes to the policy recommendations. Following this clue, it is divided into six sections.Section 1 describes the main theoretical and practical backgrounds of the dissertation and the related terminologies. The international short-term capital is such a kind of capital which can reverse quickly in a short time with sharp fluidity.Section 2 analyzes the characteristic and mechanism of the international short-term capital flows. By the mode of the Interest Rate Parity, Speculative Attacks Mode and Overshooting, and how they impact the international short-term capital flows.Section 3 discusses the research from the direct and indirect regulation, and compares those methods that have been taken by other counties including Chile, Japan, and members of the European Monetary System.Combined the general feature of the international short-term capital flows, section 4 analyzes the present situation in our China. It concludes that the phenomenon of international short-term capital inflow and capital flight coexists. Together, it analyzes the channel of those flows, including the ways under the current account, capital account, and other hidden ways.Section 5 describes the present policies of the control of the international short-term capital flows in China, and the defects of them. It focuses on the foreign direct investment (FDI), securities market, and foreign debt, also from the two sides of inflow and outflow.Based the above analysis, the last section proposes several advice on the control of the international short-term capital flows. There are mainly three aspects, including the reform of the foreign exchange, exchange rate, interest regime; the harmony of the capital account opening and control by transferring the prior regulation to after regulation, and building an effective warning system; and also the international cooperation.