The Research Of FTZ' Promotion To The Capital Account Liberalization In China

n September 29,2013,China(Shanghai)free trade zone was formally established."The Master Plan for China(Shanghai)Free Trade Zone Pilot Program" was subsequently issued,where it suggests that free trade zone("FTZ"),underrisk controlled conditions,should take the lead in terms of marketization of the interest rate,full convertability of capital account,and cross-border use of RMB,etc.In 2015 FTZs in Tianjin,Guangdong and Fujian have been established as well.There are also many other FTZs under review for approval.Adopting an open-up policy on capital projects within the FTZ as a pilot program has great significance for the full liberalization of the capital accounts nationwide.This article uses methods of comparative cases studies,quantitative and qualitative analysis to assess the following:status quo of capital projects undergoing the open up process;the initiatives taken regarding capital account liberalization in Shanghai FTZ and Tianjin FTZ;the innovative proposal to promote capital account liberalization through FTZ taking the lead to achieve market-oriented exchange rates and interest rates,promoting the development of offshore renminbi business,reforming financial institutions and laxing financial regulation policies.FTZs' experience will greatly contribute to the nationwide open-up of capital projects.This paper is divided into six chapters.The first chapter is the introduction part,which proposes the research background and significance of the study,summarizes relevant literature on capital account liberalization in the past few years,and at last points out the significance and weaknesses of this paper.The second chapter elaborates the theory of capital account liberalization,mainly including the theory of capital account liberalization,financial deepening theory,ternary paradox and cross-border capital flow theory,etc.Chapter three by comparing cases worldwide,summarizes the experience of international capital account liberalization and development of FTZs,provides an overview of the current situation of capital account liberalization and FTZ in China,and introduces methods of measuring the level of openness of China's capital account.Chapter four analyzes various factors conducive to China's capital account liberalization,such as interest rates,exchange rates,and other offshore financial markets.The following part in this chapter introduces there form of those factors within the FTZs and how they could lead to the full open-up of nationwide capital accounts liberalization.Chapter Five studies the risk of opening capital accounts first in the FTZs,and how to prevent these risks.Chapter six is the conclusion,drawn from the analysis of the above-mentioned five chapters.