The Temptation of China’s Capital Account
The People's Bank of China has been pursuing capital-account liberalization at an increasing rate since 2009. But Chinese policymakers should recognize the significant risks inherent in relaxing capital controls – risks that imply the need for a more cautious approach.
BEIJING – Despite fluctuations, China’s overall economic growth has been stable over the last three decades, owing not only to the economy’s strong fundamentals, but also to the government’s successful management of cross-border capital flows.