Management of China’s cross-border capital flows

Since the turn of the century, especially since the global fiscal crisis in 2008, China’s process of capital account opening and RMB internationalization has begun to accelerate, and financial openness has improved significantly. However, due to the pressure of large-scale capital outflow over the last two years, the government has adopted a policy combination of exchange rate management, market intervention, and capital flow management. The liberalization and management of cross-border capital flow are closely linked. Based on current trends of China’s cross-border capital flows management, macro-management and micro-regulation should be distinguished in the future to construct a dual-pillar framework. In addition, cross-border capital flows management, especially capital controls, should be temporary measures. If used reasonably, they can buy some time for other reforms and adjustments.