The Internationalization of the RMB, Capital Market Openness, and Financial Reforms in China

27 Pages Posted: 24 Feb 2015

See all articles by Joshua Aizenman

Joshua Aizenman

University of Southern California - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 12, 2015

Abstract

This paper provides an overview of Chinese financial and trade integration in recent decades, and the challenges facing China in the coming years. China had been a prime example of export-led growth, benefiting from learning by doing, and by adopting foreign know-how, supported by a complex industrial policy. While the resultant growth has been spectacular, it comes with hidden but growing costs and distortions. The Chinese export-led growth path has been challenged by its own success, and the Global Financial Crisis forced China toward rebalancing, which is a work in progress. Reflecting on the internationalization of the CNY, one expects the rapid accelerating of the commercial internationalization of the CNY. In contrast, there are no clear-cut reasons to rush with the full CNY financial internationalization: The gains from CNY financial internationalization are overrated.

Keywords: export led growth, CNY internationalization, mercantilism, financial integration, FDI

JEL Classification: E6, F3, F4, F6, O2, O4

Suggested Citation

Aizenman, Joshua, The Internationalization of the RMB, Capital Market Openness, and Financial Reforms in China (February 12, 2015). BOFIT Discussion Paper No. 4/2015. Available at SSRN: https://ssrn.com/abstract=2568539 or http://dx.doi.org/10.2139/ssrn.2568539

Joshua Aizenman (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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