International Financial Trends and China's Financial Opening Strategy: Should the RMB Exchange Rate Be Appreciated?

Author: Chen Bingcai
Publisher:
Publish Date: 2004-06-01
Features: The theoretical understanding to be addressed here is: the need to re-evaluate the theory of financial liberalization. The globalization of finance and capital flows, which know no borders, also need to be re-evaluated. For example, can the Chinese yuan and its checks be used worldwide? No, finance is border-bound; only international currencies can (currently mainly the US dollar, the euro, etc.). Exchange rates must distinguish between international and non-international currency countries, as well as the differences between economies dominated by material production and those dominated by the financial economy. China is an economy dominated by material production. Therefore, it is necessary to develop one's own theories and perspectives. Only by resolving these issues can China's capital market development and financial rise proceed through a gradual and steady internationalization process. It will only achieve sustainable rise in the next 15–20 years. Do not be misled by short-term stock market gains and overhasten development. The capital market is primarily for institutional construction and corporate governance, resolving contradictions, rather than driving stock prices and index rises. Avoiding crises is what makes one strong.