Abstract

ㅁChina recognises the many benefits of capital flow liberalisation as a key development driver
ㅁDevelopments shaping favourable preconditions for successful capital account liberalisation process
ㅁWe envision China’s capital account to be “basically” open in around five years

China’s capital account convertibility strategy was first put forward in the early 1990s. The process was interrupted by the Asian Financial Crisis of 1997, but the 2008 Global Financial Crisis provided Beijing with a new window of opportunity. The shortage and increased volatility of major currencies led to a rise in the global demand for the Chinese yuan, a situation that led China to facilitate its usage in cross-border trades and investments.