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

HKIMR Working Paper No.11/2015

28 Pages Posted: 12 May 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: May 12, 2015

Abstract

Liberalizing China’s capital account may have profound implications for the RMB exchange rate, monetary policy autonomy, and Chinese and the world economy. Owing to the scarcity of proper measurements of 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 data set of indices including de jure and hybrid measurements of the changes in China’s capital controls, hoping to inspire a new avenue of research in this area. In contrasting to other capital control indices that are compiled in a yes-or-no style, we quantify the intensity of changes in China’s capital controls. Our indices reveal a persistent but uneven process of capital account liberalization in China between 1999 and 2012. This paper describes the de jure and hybrid indices, including indices for capital controls on individual asset categories, gross flows, inflows and outflows, as well as for residents and nonresidents asset transactions. Understanding that China usually implements policies in a step by step gradualist style, we extract those gradual information from the lines of the text in the IMF’s Annual Report on Exchange Arrangement and Exchange Restrictions (AREAER) and some supplementary material from other sources.

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 (May 12, 2015). HKIMR Working Paper No.11/2015. Available at SSRN: https://ssrn.com/abstract=2605303 or http://dx.doi.org/10.2139/ssrn.2605303

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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