Measuring the On-Going Changes in China's Capital Flow Management: A De Jure and a Hybrid Index Data Set

28 Pages Posted: 20 Jan 2015 Last revised: 18 Apr 2015

See all articles by Jinzhao Chen

Jinzhao Chen

Ecole Superieure Des Sciences Commerciales D'Angers (ESSCA)

Xingwang Qian

State University of New York, Buffalo State

Multiple version iconThere are 2 versions of this paper

Date Written: April 2015

Abstract

Liberalizing China’s capital account may impose profound implications on the RMB exchange rate, monetary policy autonomy, Chinese and the world economy. Owing to the scarcity of proper measurements for China’s capital controls, rigorous studies on the effectiveness and implications of China’s capital controls are limited. We contribute to the literature by creating a new index data set containing de jure and hybrid measurements of the changes in China’s capital controls, hoping to inspire a new avenue of research on China’s capital controls. Contrasting to other capital control indices that are compiled in yes-or-no style, we quantify the intensity changes of China’s capital controls. Our indices reveal a persistent but uneven process of capital account liberalization in China during 1999 and 2012. This paper describes the de jure and hybrid indices, including indices for individual asset categories, gross flows, inflows and outflows, as well as resident and nonresident. Understanding that China usually implements policies step by step in the gradualism style, we extract those small-step information from the lines of the text in IMF’s Annual Report on Exchange Arrangement and Exchange Restrictions (AREAER) and some supplementary materials from other sources. This allows us to incorporate as detailed and accurate information as possible about China’s capital controls.

Keywords: Capital flows, China’s Capital Controls, de jure index, hybrid index

JEL Classification: C82, F15, F21

Suggested Citation

Chen, Jinzhao and Qian, Xingwang, Measuring the On-Going Changes in China's Capital Flow Management: A De Jure and a Hybrid Index Data Set (April 2015). Available at SSRN: https://ssrn.com/abstract=2552298 or http://dx.doi.org/10.2139/ssrn.2552298

Jinzhao Chen

Ecole Superieure Des Sciences Commerciales D'Angers (ESSCA) ( email )

1 rue Joseph Lakanal
BP 40348
Angers Cedex, 49003
France

Xingwang Qian (Contact Author)

State University of New York, Buffalo State ( email )

Classroom BLDG B232
1300 Elmwood Ave
Buffalo, NY 14222
United States
716-878-6031 (Phone)
716-878-6907 (Fax)

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