The internationalization of the RMB, capital market openness, and financial reforms in China

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Title: The internationalization of the RMB, capital market openness, and financial reforms in China
Author: Aizenman, Joshua
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 4/2015
Year of publication: 2015
Publication date: 12.2.2015
Published in: Published in Pacific Economic Review, Volume 20, Issue 3, pages 444–460, August 2015.
Pages: 27
Subject (yso): valuuttapolitiikka; talouskasvu; ulkomaankauppa; taloudellinen integraatio
Keywords: Bofit-kokoelma; Kiina; China
JEL: E60; F36; F40; F60; O24; O40
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. Publication keywords: export led growth, CNY internationalization, mercantilism, financial integration, FDI

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