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Ending Financial Repression in China

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  • James Dorn

Abstract

China has the most restricted capital markets in Asia. Constraints on capital freedom have resulted in politicization of investment decisions, corruption, waste of capital, and loss of personal freedom. Ending financial repression in China by liberalizing macro-economic prices and making the Yuan fully convertible would help China become a world-class financial centre. To do so, however, would require widespread privatization and rule of law-both of which would undermine the power of the Chinese Communist Party. The West should be patient with China and recognize that gradual reform and engagement are preferable to destructive protectionism.

Suggested Citation

  • James Dorn, 2006. "Ending Financial Repression in China," Global Economic Review, Taylor & Francis Journals, vol. 35(2), pages 231-238.
    • Handle: RePEc:taf:glecrv:v:35:y:2006:i:2:p:231-238
    DOI: 10.1080/12265080600715566
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    References listed on IDEAS

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    5. Shang-Jin Wei & Ms. Genevieve Boyreau-Debray, 2004. "Can China Grow Faster? A Diagnosis of the Fragmentation of Its Domestic Capital Market," IMF Working Papers 2004/076, International Monetary Fund.
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    7. Ben S. Bernanke, 2005. "Monetary Policy in a World of Mobile Capital," Cato Journal, Cato Journal, Cato Institute, vol. 25(1), pages 1-12, Winter.
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    Cited by:

    1. Christopher Andrew Hartwell, 2014. "Capital Controls and the Determinants of Entrepreneurship," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(6), pages 434-456, December.
    2. James Dorn, 2006. "Comments on H. Genberg: “Exchange-rate arrangements and financial integration in East Asia: on a collision course?â€\x9D," International Economics and Economic Policy, Springer, vol. 3(3), pages 383-386, December.
    3. Hartwell, Christopher A., 2011. "All That’s Old is New Again: Capital Controls and the Macroeconomic Determinants of Entrepreneurship in Emerging Markets," MPRA Paper 40257, University Library of Munich, Germany.
    4. Dehghan Nejad, Omid, 2011. "The review of financial repression policies and banking system in Iran," MPRA Paper 30924, University Library of Munich, Germany.
    5. Aoife Hanley & Wan-Hsin Liu & Andrea Vaona, 2015. "Credit depth, government intervention and innovation in China: evidence from the provincial data," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(1), pages 73-98, June.

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