The globalization of China's financial sector: Policies, consequences and lessons

Laurenceson, James (2005). The globalization of China's financial sector: Policies, consequences and lessons. In Clem Tisdell (Ed.), Globalisation and world economic policies : effects and policy responses of nations and their groupings (pp. 1-27) New Delhi, India: Serials Publications.

Attached Files (Some files may be inaccessible until you login with your UQ eSpace credentials)
Name Description MIMEType Size Downloads
jl_gcfs_04.pdf jl_gcfs_04.pdf application/pdf 106.59KB 4291
Author Laurenceson, James
Title of chapter The globalization of China's financial sector: Policies, consequences and lessons
Title of book Globalisation and world economic policies : effects and policy responses of nations and their groupings
Place of Publication New Delhi, India
Publisher Serials Publications
Publication Year 2005
Sub-type Research book chapter (original research)
ISBN 9788186771815
8186771816
Editor Clem Tisdell
Start page 1
End page 27
Total pages 27
Total chapters 9
Language eng
Subjects 340206 International Economics and International Finance
340213 Economic Development and Growth
Abstract/Summary The variety of country experiences with financial sector globalization has precipitated the emergence of a large literature discussing policies, consequences and lessons learned. China's policies and performance makes an important contribution to this discussion. In contrast to many of its neighbours, China maintains a relatively detailed system of capital controls. During the Asian financial crisis that sent most countries in the region into negative rates of growth, China continued to expand rapidly despite having a financial system that by most objective measures was the worst in Asia. This apparent contradiction has led many researchers to argue that an explanation must lie in China's usage of capital controls. This paper first reviews the policies that China has undertaken toward the globalization of its financial sector. The consequences of these policies are then summarised and policy implications are drawn for other countries embarking upon the path of financial sector globalization. It is emphasized that while China makes extensive use of capital controls, many have readily been circumvented resulting in considerable de-facto external financial liberalization. Therefore, the claim that capital controls are the reason behind China's impressive growth performance should not be over-stated.
Keyword China
globalization
financial sector
Asian financial crisis
References Almanac of China's Foreign Economics Relations and Trade (ACFERT) (various years), Hong Kong, China Resources Advertising Company. Almanac of China's Finance and Banking (ACFB) (various years), People's China Publishing House, Beijing. Bonin, J. and Y. Huang (2002) Foreign entry into Chinese banking: does WTO membership threaten domestic banks?, World Economy, 25: 1077-1093. Chai, J.C.H. (1994) Savings and investment in China, Savings and Development, XVIII: 497-516. Chai, J.C.H. (1998) China: Transition to a Market Economy. Clarendon Press, Oxford. China Daily (29/12/2001) HSBC to take minority stake in Bank of Shanghai. China Daily (15/08/2003) Capital adequacy standards set for banks. China Daily (25/10/2003) QFII scheme to be finetuned. Chou, W. and Y. Shih (1998) The Equilibrium Exchange Rate of the Chinese Renminbi, Journal of Comparative Economics, 26: 165-174. Edison, H. and C. Reinhart (2001) Stopping hot money, Journal of Development Economics, 66: 533-653. Gorton, G. and A. Winton (1998) Banking in Transitional Economies: does efficiency require instability, Journal of Money, Credit and Banking, 30: 621-651. Gregory, N. and S. Tenev, S. (2001) The Financing of Private Enterprise in China, Finance and Development, 38. Available on-line at: http://www.imf.org/external/pubs/ft/fandd/2001/03/gregory.htm Groombridge, M. (2001) Capital account liberalisation in China: prospects, prerequisites, and pitfalls, Cato Journal, 21: 119-131. Gunter, F. (1996) Capital flight from the People's Republic of China: 1984-1994, China Economic Review, 7: 77-96. Hu, F. (2001) China's WTO accession as a catalyst for capital account liberalisation, Cato Journal, 21: 101-111. International Monetary Fund (IMF) (1999) World Economic Outlook, May 1999, IMF, Washington, D.C. International Monetary Fund (IMF) (2003) Exchange arrangements and exchange restrictions 2003, IMF: Washington, D.C. International Monetary Fund (IMF) (2004) International financial statistics on-line. Jones, D., C. Li and A. Owen (2003) Growth and regional inequality in China during the reform era, China Economic Review, 14: 186-200. Kime, K. (1998) Seigniorage, Domestic Debt, and Financial Reform in China, Contemporary Economic Policy, 16: 12-21. Kueh, Y.Y. (1992) Foreign Investment and Economic Change in China, The China Quarterly, 131: 637-690. Laurenceson, J. and J.C.H. Chai (1998) Financial liberalisation and financial depth in China, Savings and Development, 22: 393-413. Laurenceson, J. and J.C.H. Chai (2003) Financial Reform and Economic Development in China. Edward Elgar, Cheltenham. Lardy, N. (1995) The Role of Foreign Trade and Investment in China's Economic Transformation, The China Quarterly, 144: 1065-1082. Lardy, N. (1998) China's Unfinished Economic Revolution. Brookings Institution Press, Washington, D.C. Lardy, N. (2002) Integrating China into the Global Economy, Brookings Institution Press, Washington, D.C. Levine, R. (2001) International Financial Liberalisation and Economic growth, Review of International Economics, 9: 688-702. Liu. M. (2003) A new milestone in the opening of China’s banking sector. Available on-line at: http://www.china.org.cn/e-news/news031201.htm McKibbon, W. and K.K. Tang (2000) Trade and financial reform in China: impacts on the world economy, World Economy, 23: 979-1003. McKinnon, R. (1991) Financial Control in the Transition from Classical Socialism to a Market Economy, Journal of Economics Perspectives, 5: 107-122. McKinnon, R. and H. Pill (1996) Credible Liberalisations and International Capital Flows: the "Overborrowing Sydrome". In: T. Ito and A. Krueger (eds) Financial Deregulation and Integration in East Asia, Chicago, University of Chicago Press: 7-37. People's Daily (07/01/2002) Three foreign banks become shareholders of Bank of Shanghai. People's Daily (02/01/2003) Annual FDI to China to reach US$100 billion. People's Daily (09/07/2003) CCB, Morgan Stanley asset management cooperation makes substantial progress. People's Daily (06/09/2003) Banks to adopt five-category loan classification system in 2004. People's Daily (03/12/2002) China green lights Sino-foreign asset firms. People's Daily (01/12/2003) China opens banking industry wider to foreign banks. People's Daily (11/12/2003) Banking reform speeding up. People's Daily (10/02/2004) Premier Wen presses for joint-stock restructure of banks. People's Daily (12/02/2004) China OKs RMB business for 4 overseas banks. Salvatore, D. (2004) International Economics. John Wiley & Sons, New Jersey. Scholtens, B. (2000) Financial Regulation and Financial System Architecture in Central Europe, Journal of Banking and Finance, 24: 525-553. The Banker (03/11/2003) All uphill for foreign banks. The Economist (02/05/1998) The Worst Banking System in Asia. The Economist (16/01/1999) GITIC's empty coffers. Time International (01/02/1999) China Hypocritical? No, Just a Bit Itic-al Foreign investors shy away as Beijing refuses to guarantee bankrupt investment firms' debt. Tsang, S. (1997) Towards the Full Convertibility of the Renminbi. In: M. Brosseau and H. Kuan and Y.Y. Keuh (eds) China Review 1997, Chinese University Press, Hong Kong: 235-252. Wu, F. and Tang, L. (2000) China's capital flight, 1990-1999: estimates and implications, Review of Pacific Basin Financial Markets and Policies, 3: 59-75. Wong, C., C. Heady and W.T. Woo (1995) Fiscal Management and Economic Reform in the People's Republic of China, Hong Kong, Oxford University Press. World Bank (1993) The East Asian miracle: economic growth and public policy, World Bank, Washington, D.C. World Bank (1996) World Development Report 1996: from plan to market, World Bank: Washington, D.C. World Bank. (2000) Global Economic Prospects and the Developing Countries. World Bank, Washington, D.C. World Bank (2001) Globalisation, growth and poverty: building an inclusive world economy. Available on-line at: http://econ.worldbank.org/prr/globalisation/text-2857/ World Bank (2003) Global Development Finance 2003, World Bank, Washington, D.C. Xinhua News Agency (28/02/2003) GITIC bankruptcy case closes with record repayments. Yu, Y. (2000). China: the case for capital controls. In W. Bello, N. Bullard and K. Malhotra (eds) Global finance: new thinking on regulating speculative capital markets, Zed Books, London: 177-187. Zhang, X. and K. Zhang (2003) How does globalisation affect regional inequality within a developing country? Evidence from China, The Journal of Development Studies, 39: 47-67.
Q-Index Code B1

 
Versions
Version Filter Type
Citation counts: Google Scholar Search Google Scholar
Created: Fri, 10 Sep 2004, 10:00:00 EST by James Laurenceson on behalf of Faculty of Business, Economics & Law