Free Convertibility Of Rmb Current Account Sustainability

I. Intention of Selecting the Topic From the very beginning of 199Os on and along with some countries transformation from planned economy to market economy, the problem of currency free convertibility has gradually become a hot point and frontier question for study in the international financial field of the world. China formally realized the free convertibility of RNIB under current items on Dec. IS 1996, and it had become another milestone in the process of China historical reform and resolute melting into the world market economy But it is a kind of mandatory transformation of system adopted under immature basic conditions as well as quite limited space of selection. therefore it must unavoidably face the problem of sustainability . And the financial crisis erupted first in Southeast Asia and then exerted global influence this year has again brought the problem of currency free convertibility research to the world attention. This selection of the text is just originated from this realistic point of view. Because of the difficulties and complexities in the transformation of China economic system, the problem of free convertibility of RMB appears very tough. To assure the sustainability of the free convertibility of R.MB under currerfl items demands some conditions, especially in the process of economic system transformation. What are they What will be the normal results and special results under immature circumstances And what will be the workable and essential measurements which could be adopted to perfect the free convertibility and make it sustainable9 It would be theoretically significant to make a comprehensive and deep study on these questions from a realistic and scientific point of view. But it is a pity that overall researches on such questions among nowadays documents is very limited, that why the writer of this article intended to make a meaningful exploitation. II. Methods Used I. The combination of standardization and positivism. The question of currency convertibility has always mingled with questions like what it shall be and hat it really is1 Only the combination of these two can show a whole picture of the question. Chapter I, 2 and 3 will dwell on positive analysis, while chapter 2 and 5 will bear more characteristics of normalized analysis. 2. The combination of universality and particularity. The convertibility of RMB not only involves the characteristics of most countries undertaking the process of transformation, but also can never be parted \vith China special national conditions. Therefore the article has worked hard on the importance of the latter and emphasized making a concrete analysis of concrete conditions. In addition, the writer uses a method of international comparison. Ill. Two Specifications 1. Usually the free convertibility of R.MB is classified into three forms: current items, capital account and domestic convertibility. This article mainly deals with the convertibility under current items. By free convertibility of RMB under current items we mean that China will carry out the liabilities set oLlt in Article Eight of the Articles of the International Monetary Fund. and cancel the limit of balance of payments on current account in order to assure the free exchange of RMB to foreign currencies. To be concrete. part two of Article Eight provides that wit...