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External Financial Liberalization and Foreign Debt in China

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Abstract

China has not been a large net capital importer during the reform period (1979-present). This is surprising because economic theory predicts it should have been in light of its low capital - labour ratio. One possible explanation with important policy implications is that foreign capital inflows may have been restricted due to the slow pace of external financial liberalization. The empirical analysis conducted in this paper lends support to this hypothesis. However, before policy makers in China can look upon external financial liberalization as a growth-inducing strategy, fiscal reform and greater levels of domestic financial liberalization are first needed.

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  • Dr James Laurenceson, 2002. "External Financial Liberalization and Foreign Debt in China," Discussion Papers Series 304, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:304
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    File URL: https://espace.library.uq.edu.au/view/UQ:11059/DP304Jan02.pdf
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    Cited by:

    1. Philip R. Lane & Sergio L. Schmukler, 2006. "The international financial integration of China and India," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.

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