Economic Effects Of China's Capital Account Liberalization Process

From the world experience, we can see that capital account liberalization is important in one country's development, so both developed countries and developing countries take it as economic target. Until 1995, almost every developed country has carried out the liberalization of the capital account, and the developing countries also work hard for this target. Exactly under this background, our country carry on overall reform, including market-oriented reform of interest rate, exchange rate system, financial institution and finance supervision, and try best to push forward the realization of the capital account liberalization in proper time.Through theory and practice, we can see that capital account liberalization can bring benefit, also cause risk probably. Especially from Latin-American's debt crisis in 1980s and more frequent crisis in 1990s, we can know that accompanying with open economy and freedom of the capital flow, liberalization really give more challenges. It's proved that without stable macroeconomic situation, sound operation mechanism, perfect financial system and valid law background etc., the liberalization of capital account will bring huge unsteady factor. So it's necessary to analyze the premise, sequence and the way of the capital account liberalization. Of course, it's important that we can't neglect the effect of these measures in the process of gradual liberalization. We must revise the route of reform continuously, and then we can guarantee the realization of target. This point is important in our analysis. So I will analyze the effect brought by liberalization, and point out further reform during the process of the liberalization in this article.The article is divided into five parts. At first, it is an introduction, including the reason of choosing this study, review of theories, explanation of conclusion and distinction of some important concepts in the following text. The first chapter is reviewing the effect of capital account liberalization from the theory aspect. The liberalization can promote the development of the economy; also bring a lot of risk. The second chapter is analyzing the process of capital account liberalization in Chile and India. We can get some apocalypses from it, and guide our country's reform. The third chapter is analyzing our country's present condition. At last of this part, we can know that the capital account liberalization can not only push the economy growth and promote financial deepening, but also bring negative influence, lower the capital usage efficiency and increase the economic risk. The fourth chapter is putting forward some reform measure to help realization of the capital account liberalization, aiming at the problem in economy.We can come to conclusion: The capital account liberalization has complicated influence to the economy. It can raise the economy efficiency, promote financial deepening and carry out the financial liberalization gradually. While it also can cause some negative influence, if it can't match with domestic reform measures. So in the process of liberalization, we should combine the experience both external and domestic, adopt appropriate reform measure. We should do our utmost to decrease the economy oscillate in the future, and carry out the capital account liberalization and financial liberalization smoothly.