Financial integration and China’s growth surge

Rod Tyers, Yixiao Zhou

    Research output: Chapter in Book/Report/Conference proceedingChapter


    China’s financial openness, as measured by cross-border flows and asset ownership, peaked during its 2000s growth surge, as did downward pressure on global interest rates and price levels. This was despite China’s restriction of financial inflows to approved FDI and tight controls on private outflows. We therefore consider two different types of financial integration. The first, Type 1, reflects the scale of cross-border flows as proportions of domestic saving or investment. The second, Type 2, indicates the weakness of capital controls and, in particular, the ease of rebalancing the Chinese collective portfolio away from official foreign reserves and across foreign regions. China’s growth surge contributed substantially to the integration of Type 1 but not Type 2. Results from global modelling are summarized showing that, with more Type 2 integration, surge effects within China would have been substantially smaller, while the global impacts on yields and inflation would have been larger.
    Original languageEnglish
    Title of host publicationChina's Rise and Internationalization Regional and Global Challenges and Impacts
    Editors Filip Abraham and Zhaoyong Zhang
    Place of PublicationSingapore
    PublisherWorld Scientific
    ISBN (Print)9789811210907
    Publication statusPublished - 2020


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