The Chinese approach to capital inflows
Subtitle: patterns and possible explanations
By: Eswar Prasad, Shang-Jin Wei.
Contributors: Wei, Shang-Jin.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11306; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11306.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Investments, Foreign -- China.; Capital movements -- China.; Monetary policy -- China.
Description: "In this paper, we adopt a cross-country perspective to examine the evolution of capital flows into China, both in terms of volumes and composition.  China's inflows have generally been dominated by foreign direct investment (FDI), a pattern that appears to be favorable in light of the recent literature on the experiences of developing countries with financial globalization.  We provide a detailed documentation of the evolution of China's capital controls, a proximate determinant of the pattern of capital inflows.  We also discuss a number of other intriguing hypotheses that attempt to capture the "deeper" causes underlying China's approach to capital flows.  In particular, we argue that some popular mercantilist-type arguments are inconsistent with the facts.  We also analyze the recent rapid rise of China's international reserves and discuss its implications.  Contrary to some popular perceptions, the dramatic surge in foreign exchange reserves since 2001 is mainly attributable to non-FDI capital inflows, rather than current account surpluses or FDI"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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