New Features and Risks of China's Cross-Border Capital Flows and Policy Recommendations

Wen He

doi:10.54097/mg0wsa45

Authors

Wen He

DOI:

https://doi.org/10.54097/mg0wsa45

Keywords:

Cross-border Capital, Capital Flow, Capital Controls, Belt and Road Initiative, Covid-19

Abstract

With mainland China as its primary focus, this article analyzes the patterns of cross-border capital movements. Examining the characteristics and potential hazards of these flows, the study conducts an in-depth analysis of cross-border capital and provides an exhaustive review of pertinent literature. China's international direct investment outflows increased significantly, while capital inflows decreased, and the scope of foreign direct investments expanded, according to the findings. In addition, the research illuminates forthcoming obstacles, specifically the consequences of the COVID-19 pandemic on the equilibrium of the global economy and the volatility of exchange rates. In order to strengthen China's economic stability, the article concludes with policy recommendations that emphasize the significance of flexible policy mechanisms and the strategic allocation of foreign exchange reserves.

Downloads

Download data is not yet available.

References

Jongwanich J. Capital controls in emerging East Asia: How do they affect investment flows? [J]. Journal of Asian Economics, 2019, 62: 17 - 38.

Ju J, Yu X. China's opening up after 40 years: standing at a historic turning point [J]. China & World Economy, 2018, 26 (2): 23 - 49.

Fang J, Collins A, Yao S. On the global COVID-19 pandemic and China’s FDI [J]. Journal of Asian Economics, 2021, 74: 101300.

Tong H, Wei S J. Endogenous corporate leverage response to a safer macro environment: The case of foreign exchange reserve accumulation[J]. Journal of International Economics, 2021, 132: 103499.

Buckley, P.J., Clegg, L.J., Voss, H. et al. A retrospective and agenda for future research on Chinese outward foreign direct investment. J Int Bus Stud 49, 4 – 23 (2018).

Pasricha G K, Falagiarda M, Bijsterbosch M, et al. Domestic and multilateral effects of capital controls in emerging markets [J]. Journal of International Economics, 2018, 115: 48 - 58.

Petry J. Same same, but different: Varieties of capital markets, Chinese state capitalism and the global financial order [J]. Competition & Change, 2021, 25 (5): 605 - 630.

Morrison, Wayne M. "CHINA'S ECONOMIC RISE: HISTORY, TRENDS, CHALLENGES, AND IMPLICATIONS FOR THE UNITED STATES *." Current Politics and Economics of Northern and Western Asia 28.2 (2019): 189-242. ProQuest. Web. 14 Oct. 2023.

Park C Y, Petri P A, Plummer M G. The economics of conflict and cooperation in the Asia-pacific: RCEP, CPTPP and the US-China trade war [J]. East Asian economic review, 2021, 25 (3): 233 - 272.

Latief, R.; Lefen, L. The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along "One Belt and One Road". Int. J. Financial Stud. 2018, 6, 86.