China's Capital Account Opening Process, Short-term Capital Flow Supervision

1,Purpose of this researchA series of financial crisis such as the 1994 Mexican financial crisis, 1997 Asian crisis has swamped the developing countries in the 1990s . 7 among the 11 countries that had suffered the crisis was in the process of capital account liberalization which suggested that capital account liberalization did bring some risks for these countries or even brought about crisis.Lots of research also proved that one of the most important reasons why capital account liberalization caused risks to developing countries was a large-scale capital inflow as a result of capital account liberalization. Moreover, those kinds of capital didn't go to the real economy but high-risk sectors such as banking and real estate which finally caused the financial crisis or even twin crisis in these countries.The reason why these risks came about was a lack of corresponding reforms and an effective supervision framework in these countries. Therefore it's indispensable for developing countries to set up an effective supervision framework before its capital account liberalization.China, in recent years, also experienced an excessive capital inflow since 2002 while an effective supervision mechanism was not set up yet, therefore it's very important to make a research into this issue.2,Content of this essayThis essay is divided into five chapters,two parts. Part 1, containing chapter 1-2, mainly introduces the current capital flow status of our country and lessons from Thailand. Part 2, containing chapter 3-4 analyzes the general situation of financial supervision of our country together with an introduction of practice and experience from other developing countries and finally gives suggestions on how to strengthen...