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Financial liberalisation in China: economic policy outlook and global implications

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  • Lucía Cuadro-Sáez
  • Sonsoles Gallego

Abstract

Financial liberalisation in China has advanced significantly in the past three years. It has done so both domestically, with market principles weighing more on the functioning of the banking system, and externally, with the adoption of a series of measures culminating in the inclusion of the renminbi in the IMF’s Special Drawing Rights (SDR) basket, effective this October. This financial liberalisation process is a fundamental ingredient in the ongoing rebalancing of the Chinese growth model, but it also entails some short-term risks, as highlighted by the bouts of turbulence recorded last year and early in 2016. This article reviews recent headway in liberalisation and the economic policy implications in China.

Suggested Citation

  • Lucía Cuadro-Sáez & Sonsoles Gallego, 2016. "Financial liberalisation in China: economic policy outlook and global implications," Economic Bulletin, Banco de España, issue MAY, pages 35-48, May.
    • Handle: RePEc:bde:journl:y:2016:i:5:n:3
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    References listed on IDEAS

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    4. Mr. Eswar S Prasad & Mr. Qing Wang & Mr. Thomas Rumbaugh, 2005. "Putting the Cart Before the Horse? Capital Account Liberalization and Exchange Rate Flexibility in China," IMF Policy Discussion Papers 2005/001, International Monetary Fund.
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