China’s Financial Openness Mode And Its Effect Of Economic Growth

In the 1970s, with the gradual disintegration of the Bretton Woods System, the global financial system has undergone great changes. Along with McKinnon and Shaw bringing in the Financial Liberalization Theory, many developing countries gradually began to implement financial reform to realize financial liberalization and hoped that Financial Openness can promote the development of their economy. However, financial openness is a "double-edged sword", on the one hand it can make its own rapid access to foreign capital, domestic market can rapid integrate into the global market, thereby reducing the financial costs, improving financial efficiency, and promoting the rapid development of the national macro-economy. But on the other hand, affected by various domestic and international instability factors, financial openness may lead to the occurrence of domestic macroeconomic volatility in its process of integrating into the global financial system. Issues such as the pros and cons of the financial impact on the economic development of developing countries and whether financial liberalization can promote financial development and economic growth therefore get the attention from scholars. However, after years of in-depth exploration of theory and a lot of empirical research, there is still no consensus.China formally joined the WTO commitments in 2001, to be more deeply integrated into the flow of economic globalization, China has to further accelerate the pace of financial liberalization. Thus studying the relationship between financial liberalization and economic growth has great significance for the further development of China’s economy.Combining the method of normative analysis and empirical analysis together, this paper want to find out if China’s financial openness promote the economic growth and which kind of open mode is appropriate for China. Firstly reviews the relevant theories of Financial Openness and research status, to form the theory basis of our country’s Financial Openness research; then states China’s financial opening process, then construct econometric model to analyze the relationship between financial openness and economic growth, finally points out that China’s process of financial openness has some problems which needs to be improved; then state Hungary and Russia’s financial opening process, comparative analyze the difference between the two modes adopted by Russia and Hungary, Russia’s mode was radical while Hungary’s mode was rational, analyze the different results brought by the very different modes and find out the reasons. So to provide significant reference to China which also is a transition country. This paper find out:China’s financial openness do promote economic growth; China should adopt rational financial openness mode. Lastly corresponding suggestions are given:establishing a mature financial market system, strengthening the competitive power of the financial institutions in our country, building a sound financial legal system and establishing a perfect financial regulatory system.