As Conditions for Capital Account Liberalization Are Immature, China Should First Achieve a Free-Floating Exchange Rate Regime, says Yu Yongding
Four things need to be done before liberalizing China’s capital account: new.cf40.org.cn/uploads/202009… 1/5
First, float the #RMB exchange rate. Generally speaking, this is a must before China steps up its opening-up of the capital account. 2/5
Second, clearly define and strictly protect property rights. It would be hard to stop capital flight and dangerous to open up the capital account hastily if property rights are ill-defined and protected. 3/5
Third, fully develop the government bond market. Although #China’s bond market already ranks the second in the world, its government bond market remains underdeveloped, which has hindered the liberalization of its capital account. 4/5
Fourth, flows of hot money, which do no good to the recipient country, must be restrained in any case, though the exact measures can be discussed separately. 5/5
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