International Capital Flows And China's Financial Reform Policy Choice

Nowadays, international capital flows have become the most important power of driving the global economy in the place of international trade. To some extent, the change of capital flows could explain the shape and change of global economic pattern. As international capital has utmost influence on a country's economy under the background of globalization, research on effective management of international capital flows become a key topic for discussion on economic policies. Meanwhile, it is urgently required to work out a solution to eliminate the impact on a country's economy and regional economic crisis which international capital may have brought about.As the bottleneck in financial field is the main barrier in sustainable growth of China's future economy, finance reform should be regarded as the top economic problem to solve. The thesis begins with analyzing the present conditions and influences of capital flows. It combines the key points of finance reform with current pattern of international capital flows in China. It mainly focuses the research of international capital flows on the following four aspects: Firstly, we should open capital account gradually. Capital convertibility can reduce the high cost of capital controls, promote the normalization and development of capital markets, and activate domestic financial sector. Secondly, we should enlarge the fluctuation range of RMB exchange rate and enhance the flexibility of the system arrangement of RMB exchange rate. Thirdly, we should enforce the revolution of interest rate in order to make it reflect supply and demand of capital timely and accurately, and transfer such information to relevant participant. In the end, relevant authority should pay attention to the cautious supervision in the process of opening bank sectors after China's entry to WTO. The proper supervisory measures in bank sectors greatly concern the security and stability of China's finance and economy.