Risky business: Financial-sector liberalization and China

Research output: Contribution to journalArticle

Abstract

China's dramatic growth in exports, its rising conflict with its trade partners over the perceived undervaluation of the renminbi, and the snail's pace of financial liberalization is pushing its bilateral trade and monetary relations to a boil. Discontent in the United States, Japan, Southeast Asia, and, most recently, Brazil, has led popular pundits and even country finance ministers to speak publicly of a "currency war" with many calling for the de-pegging of the renminbi to the dollar and an immediate appreciation of China's currency. However, China's history of liberalization, beginning with the opening to the West in 1978, is well known as one of gradualism in trade and the financial spheres. Economic history is replete with economic crises brought on by too rapid or premature liberalization of countries' capital flows. This article presents the case both for and against capital account liberalization and highlights the risks that China in particular confronts in responding to external demands for greater openness and an appreciation of the renminbi. It clearly captures the tightrope that China must walk between responding to the demands of its trade partners and maintaining economic growth and political stability at home.

Original languageEnglish (US)
Pages (from-to)469-482
Number of pages14
JournalThunderbird International Business Review
Volume53
Issue number4
DOIs
StatePublished - Jul 1 2011
Externally publishedYes

Fingerprint

liberalization
China
currency
gradualism
trade relations
economic history
capital flow
capital movement
political stability
finance
snail
economic growth
Southeast Asia
economic crisis
dollar
minister
Brazil
Japan
Financial sector
Liberalization

ASJC Scopus subject areas

  • Business and International Management
  • Geography, Planning and Development
  • Political Science and International Relations

Cite this

Risky business : Financial-sector liberalization and China. / Goddard, Chester Roe.

In: Thunderbird International Business Review, Vol. 53, No. 4, 01.07.2011, p. 469-482.

Research output: Contribution to journalArticle

@article{27e784da49ba4eb6b989a46d38fe21e9,
title = "Risky business: Financial-sector liberalization and China",
abstract = "China's dramatic growth in exports, its rising conflict with its trade partners over the perceived undervaluation of the renminbi, and the snail's pace of financial liberalization is pushing its bilateral trade and monetary relations to a boil. Discontent in the United States, Japan, Southeast Asia, and, most recently, Brazil, has led popular pundits and even country finance ministers to speak publicly of a {"}currency war{"} with many calling for the de-pegging of the renminbi to the dollar and an immediate appreciation of China's currency. However, China's history of liberalization, beginning with the opening to the West in 1978, is well known as one of gradualism in trade and the financial spheres. Economic history is replete with economic crises brought on by too rapid or premature liberalization of countries' capital flows. This article presents the case both for and against capital account liberalization and highlights the risks that China in particular confronts in responding to external demands for greater openness and an appreciation of the renminbi. It clearly captures the tightrope that China must walk between responding to the demands of its trade partners and maintaining economic growth and political stability at home.",
author = "Goddard, {Chester Roe}",
year = "2011",
month = "7",
day = "1",
doi = "10.1002/tie.20424",
language = "English (US)",
volume = "53",
pages = "469--482",
journal = "Thunderbird International Business Review",
issn = "1096-4762",
publisher = "John Wiley and Sons Inc.",
number = "4",

}

TY - JOUR

T1 - Risky business

T2 - Financial-sector liberalization and China

AU - Goddard, Chester Roe

PY - 2011/7/1

Y1 - 2011/7/1

N2 - China's dramatic growth in exports, its rising conflict with its trade partners over the perceived undervaluation of the renminbi, and the snail's pace of financial liberalization is pushing its bilateral trade and monetary relations to a boil. Discontent in the United States, Japan, Southeast Asia, and, most recently, Brazil, has led popular pundits and even country finance ministers to speak publicly of a "currency war" with many calling for the de-pegging of the renminbi to the dollar and an immediate appreciation of China's currency. However, China's history of liberalization, beginning with the opening to the West in 1978, is well known as one of gradualism in trade and the financial spheres. Economic history is replete with economic crises brought on by too rapid or premature liberalization of countries' capital flows. This article presents the case both for and against capital account liberalization and highlights the risks that China in particular confronts in responding to external demands for greater openness and an appreciation of the renminbi. It clearly captures the tightrope that China must walk between responding to the demands of its trade partners and maintaining economic growth and political stability at home.

AB - China's dramatic growth in exports, its rising conflict with its trade partners over the perceived undervaluation of the renminbi, and the snail's pace of financial liberalization is pushing its bilateral trade and monetary relations to a boil. Discontent in the United States, Japan, Southeast Asia, and, most recently, Brazil, has led popular pundits and even country finance ministers to speak publicly of a "currency war" with many calling for the de-pegging of the renminbi to the dollar and an immediate appreciation of China's currency. However, China's history of liberalization, beginning with the opening to the West in 1978, is well known as one of gradualism in trade and the financial spheres. Economic history is replete with economic crises brought on by too rapid or premature liberalization of countries' capital flows. This article presents the case both for and against capital account liberalization and highlights the risks that China in particular confronts in responding to external demands for greater openness and an appreciation of the renminbi. It clearly captures the tightrope that China must walk between responding to the demands of its trade partners and maintaining economic growth and political stability at home.

UR - http://www.scopus.com/inward/record.url?scp=79959568475&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=79959568475&partnerID=8YFLogxK

U2 - 10.1002/tie.20424

DO - 10.1002/tie.20424

M3 - Article

AN - SCOPUS:79959568475

VL - 53

SP - 469

EP - 482

JO - Thunderbird International Business Review

JF - Thunderbird International Business Review

SN - 1096-4762

IS - 4

ER -