China International Capital Flows And The Effectiveness Of Monetary Policy In Open Economies

International capital movement has always been one of the most important subjects during the development of world economy. With the integration and globalization of world economy, especially since 1990's, it appears to be more meaningful to make further study of international capital movement. Since the reform and opening to the outside world, China has closer relationship with the global economy and the international market has a distinct impact on the development of China.From the aspects of capital movement, the transformation of the capital movement of China has sufficiently reflected this point. We can easily find these changes in the following facets: higher degree of dependence upon foreign trade, large scale of international capital inflow, large amount of foreign debt and foreign exchange reserve, the convertibility of current accounts and the release of control on capital accounts, the opening of the financial markets etc. All these factors mentioned above have produced great impacts on the reliability of monetary policies. It's an unavoidable problem that how to execute effective macro-policies under the conditions of open economy entity.Under the conditions of open economy, the targets of the government policies include four elements. They are stable commodity prices, full employment, economic growth and balance of payments equilibrium. When the degree of the country's opening to the outside is relatively low, the objects of the macro policies concentrate on internal equilibrium.However,when a country gradually opens its economy to the world, with the advancement of degree of opening, the targets that the government pursue will be also influenced . It will change from the target of pursuing internal equilibrium to that of dual equilibrium which enables the economy to reach internal and external economic balance. For the...