| As the global liberalization process accelerating and the scale of international cross-border capital flow increasing, control measures on capital account taken by Chinese government becomes looser. At the same time, the degree of capital account liberalization continues to deepen and the process of RMB liberalization continues to accelerate. In this background, to study the impact of China’s capital account liberalization on economic growth will help us to clarify the relationship between them. Meanwhile, it will also help us to adjustment a series of measures in the capital account liberalization process, in order to promote economic growth and minimum adverse effects of capital account liberalization.In this paper, we analyze the mechanism and results of capital account liberalization influenced China’s economic growth, based on the neoclassical capital flows theory and economic growth theory and the analysis of the current situation. Then we use a VAR model quantitatively analyze the dynamic impact of capital account liberalization to China’s economic growth. Through this study we get three main conclusions. First, China’s capital account liberalization process continues to accelerate and the impact on the domestic financial markets continues to deepen since 2001. Second, Capital account liberalization will affect China’s economic growth in five areas, such as domestic interest rates, domestic savings, risk-sharing mechanisms, the development of financial markets and technological advances. Third, the increase of capital inflows openness will promote China’s economic growth, while the increase of capital outflows openness will have a negative impact on China’s economic growth since 2001. Moreover, the increase of RMB cross-border settlement scale will promote China’s economic growth in short term but do harm in the long term. Finally, according to the theoretical and empirical analysis, we put forward some policy recommendations based on China’s actual situation. |
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