RMB free exchange and internationalization

Author: Liu Guangcan et al
Publisher:
Publish Date: 2003-07-01
Features: The book is divided into seven chapters. It first discusses the general theory of currency convertibility, then thoroughly explores various theoretical and practical issues regarding the convertibility of the RMB across the three levels mentioned above. The last two chapters discuss several issues related to the free convertibility of the RMB, including the RMB exchange rate mechanism, the development of the foreign exchange market, foreign exchange reserve management, and the impact of China's entry into the WTO on its foreign financial sector. The book offers innovative insights in many aspects. For example, while there has been much debate on the conditions for capital account openness, most analyses remain purely theoretical. This book, however, conducts an in-depth empirical analysis of several widely recognized conditions by drawing on the Mexican and Asian financial crises, leading to new and enlightening conclusions. Such as, capital account openness does not necessarily require massive foreign exchange reserves; maintaining a moderate level is sufficient. In the near future, gradually achieving RMB convertibility will not only meet the goals of establishing China's market economy system but also align with the broader need for economic openness, the post-WTO landscape, and the creation of a Greater China economic circle. From the perspectives of economic globalization, financial internationalization, and China's role in rebuilding the international financial system, the book elaborates in detail how the hesitation to open the capital account after the Asian financial crisis, though understandable, should be addressed with further research, policy proposals, and proactive efforts to create the necessary conditions for breakthroughs. We argue that the conditions for openness should not be viewed as a rigid measure but should be considered in dynamic interaction with the process of openness itself. Referring to the OECD's "Principles for Capital Mobility Liberalization," the book proposes a timeline and sequence for the various measures to achieve capital account convertibility of the RMB. Such specific policy recommendations for advancing RMB convertibility are rare in domestic research and hold significant reference value.