Research On The Impact Of China's Capital Account Opening On RMB Internationalization

The report of the 19 th National Congress of the Communist Party of China stated that "China's door to openness will not be closed,but will only grow larger.We must actively participate in and promote the process of economic globalization and develop a higher level of open economy." The influence in international trading activities has continued to increase.In 2015,the RMB was officially included in the SDR(Special Drawing Rights)currency basket,which marked a leap in the internationalization of the RMB.However,the current capital account controls in China affect the construction of the RMB backflow mechanism,thereby restricting the circulation,use,and holding of the RMB at home and abroad.The three major international currency functions are also limited,and the capital account needs to be continuously opened.It is worth noting that the blind and disorderly deregulation of the capital account will inevitably cause abnormal RMB flow,which will have an impact on China's economy and even the global economy,and cause huge risks.Therefore,it is of great practical significance to study how capital projects are opened and their impact on RMB internationalization.Based on the above background,this article explores the impact of changes in the openness of the capital account on the development of the internationalization of the RMB,and gives the capital account opening path and policy recommendations to promote the development of the internationalization of the RMB.First,sort out the theories and concepts related to currency internationalization and capital account opening;second,explain the historical process and development status of RMB internationalization development and capital account opening;and second,make legal and fact-level measures of capital account openness.In addition,it also optimized the calculation of RMB internationalization at the same time,and calculated the five major international currencies,including the US dollar,and the RMB internationalization index.Finally,the panel data of the United States and China were used as samples,and Hansen panel threshold regression model was used for regression.The results show that no matter what level of capital account is open,the improvement of economic strength will have a positive effect on the development of RMB internationalization;while the growth of trade scale will promote or inhibit the development of RMB internationalization in different open ranges.At the current level of openness,the increase in exports promotes the internationalization of the RMB,while the increase in imports shows a weak restraint.When the capital account is opened to a high level,the development of financial markets has the most significant effect on its promotion.In terms of currency stability,the current account Both the exchange rate and inflation rate fluctuations at the opening level have a restraining effect on the development of RMB internationalization.When entering a high-level opening stage,appropriate exchange rate fluctuations will promote the development of RMB internationalization.Based on the results of the above analysis,we provide specific capital account opening paths and policy recommendations to promote the development of RMB internationalization.In terms of opening paths: follow the open principles of gradual progress,overall planning,and strict supervision;"Subsequent non-entity" opening sequence;expansion of the approval period for qualified foreign institutional investors(QFII)and other capital account transition policies and approval target countries,development of offshore markets,strict supervision of direct investment qualifications,expansion of investment scope,strengthening of Cooperation with neighboring countries,etc.,has steadily promoted the opening of the capital account and gradually increased the bargaining and pricing power of the RMB in international trading activities.In terms of the policy recommendations for the internationalization of the RMB: ensure stable and sound economic development and provide basic guarantees for the RMB to enter the international market;increase the scale of intra-regional trade and gradually increase the proportion of the RMB as a trade settlement and denomination currency;and enhance the depth and breadth of China's financial market We will focus on building bond and securities markets,and enrich the variety of financial instruments;realize the stable development of the value of the renminbi,and strengthen the confidence of currency holders.This article may be innovative in two aspects.First,the existing capital account openness measurement method is optimized to make the calculation basis more suitable for China's actual development,and the calculation results are more in line with China's true openness level.The second is to explore whether the role of various factors on the development of RMB internationalization has changed from the perspective of capital account opening,providing more basis for further opening up the capital account and promoting the development of RMB internationalization.