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China's Financial Opening Up: Pattern, Fundamental Conditions and Market Effect Evaluation

【Authors】
WU Xiaoqiu, GUO Biao, FANG Minghao & LI Shiyao
【WorkUnit】
Renmin University of China, 100872.
【Abstract】

This paper analyzes the process and current situation of China's financial opening up, summarizes the experience and lessons of financial opening up of typical major and emerging economies, puts forward the path selection of China's financial opening up, and evaluates the market effect. The core points of this paper are as below. (1)In the process of China's comprehensive financial opening up, we should make a choice among the three objectives of “monetary policy independence, exchange rate stability and free capital flow”, and our suggestion for policy design is the combination of “monetary policy independence and free capital flow” to form a market-determined exchange rate mechanism. (2)At present, the focus of financial opening up is the opening up of financial institutions, which is a unique path for China, but RMB liberalization remains a task that cannot be dodged. (3)The hard power of China's financial opening up is basically available, but the soft power is relatively weak, and the financial infrastructure needs to be improved urgently.(4)There are two goals for China's comprehensive financial opening up: RMB liberalization and internationalization, and the establishment of a new international financial center. (5)The market effect of China's financial opening up has the dual characteristics of major and emerging economies. With the improvement of soft power, the Chinese financial market (mainly the RMB exchange rate), once fully opened, will show the trend of short-term fluctuation and long-term convergence.


JEL:G15, G18, G28

【KeyWords】
Financial Opening Up, Financial Center, RMB Liberalization, Mundellian Trilemma