Download publication

Working Paper

Financial openness of China and India: Implications for capital account liberalisation

We gauge the de-facto capital account openness of the Chinese and Indian economies by testing the law of one price on the basis of onshore and offshore price gaps for three key financial instruments. Generally, the three measures show both economies becoming more financially open over time. Over the past decade, the Indian economy on average appears to be more open financially than the Chinese economy, but China seems to be catching up with India in the wake of the global financial crisis. Both have more work to do to open their capital accounts.

By: and Date: May 14, 2014 Finance & Financial RegulationGlobal Economics & Governance Tags & Topics

See comment by Guonan Ma China’s financial liberalisation: interest rate deregulation or currency flexibility first?

In this working paper we gauge the de-facto capital account openness of the Chinese and Indian economies by testing the law of one price on the basis of onshore and offshore price gaps for three key financial instruments. Generally, the three measures show both economies becoming more financially open over time. Over the past decade, the Indian economy on average appears to be more open financially than the Chinese economy, but China seems to be catching up with India in the wake of the global financial crisis. Both have more work to do to open their capital accounts.

Our price-based measures suggest strong inward pressure on Chinese money markets, in contrast to the consensus projection that China is likely to experience net private capital outflows when it thoroughly opens up financially. Policymakers need to monitor and to manage the risks along the dynamic path of capital account liberalization.

View comments
Read article Download PDF

Working Paper

cover

Reform of the European Union financial supervisory and regulatory architecture and its implications for Asia

This Working Paper reviews recent developments in the EU’s financial supervisory and regulatory architecture with a view to draw out lessons for regional financial regulatory architecture in Asia.

By: Zsolt Darvas, Dirk Schoenmaker and Nicolas Véron Topic: Finance & Financial Regulation, Global Economics & Governance Date: November 17, 2016
Read article More on this topic

Blog Post

Alicia García-Herrero
DSC_0160

Trump could give new impetus to EU-China relations

It is too early to say what the Trump administration’s trade policy will look like – but a total cut-off from Asian partners is unlikely. It would harm the US economy, and offer China even more scope to cement its position in Asia. Nevertheless, with TPP and TTIP both looking unlikely, the EU should move fast to build relationships with China and ASEAN countries.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: November 15, 2016
Read article More on this topic More by this author

Podcast

Podcast

Opportunities and challenges for EU-China trade relations

How can trade relations between the EU and China be strengthened? How can the current situation be improved, and what are the potential challenges to do that?

By: Bruegel Topic: Global Economics & Governance Date: November 8, 2016
Read article Download PDF More by this author

Policy Contribution

pc-19-2016_page_01

Financial regulation: The G20’s missing Chinese dream

The current fairly peripheral role of China in the global financial regulatory system is increasingly problematic. The system needs a guiding vision in which China becomes much more central – a ‘Chinese dream.’ This paper outlines three clusters of initiatives to achieve a global financial regulatory system in which China holds a major position.

By: Nicolas Véron Topic: Finance & Financial Regulation, Global Economics & Governance Date: October 26, 2016
Read article More on this topic More by this author

Blog Post

Headshot

India’s economic journey: why should Europe care?

Which political and economic policy domains link India and Europe? Which key issues, challenges and debates are engaging the Modi government half-way through its five-year term? This post sets the scene for periodic posts on strategic dimensions of relations between India and Europe now and into the future.

By: Suman Bery Topic: Global Economics & Governance Date: October 24, 2016
Read article More on this topic

Blog Post

pravakar

Why have export-oriented units in India failed to deliver?

In 1980, the Export Oriented Unit (EOU) Scheme was launched in India to boost exports and increase production. Though a number of provisions and exemptions including both fiscal and non-fiscal incentives have been extended to the Scheme to achieve the desired goal, the performance of EOUs has been far from satisfactory, particularly in the past few years. Therefore, it is time for a relook at the EOU Scheme for export promotions in context of report on performance of EOU Scheme by the Comptroller and Auditor General (CAG) of India. This issue is pertinent in the context of India’s declining exports and rising trade deficit.

By: Niloptal Goswami and Pravakar Sahoo Topic: Global Economics & Governance Date: October 22, 2016
Read article More on this topic More by this author

Blog Post

pravakar

Opening of the Indian economy to foreign investors: opportunities for Europe

The latest changes in foreign direct investment norms in India have made entry and control of foreign investors in a lot of sectors easier.

By: Pravakar Sahoo Topic: Global Economics & Governance Date: October 22, 2016
Read article Download PDF More on this topic

Policy Contribution

pc-18-16

What consequences would a post-Brexit China-UK trade deal have for the EU?

A China-UK free trade agreement has been extensively discussed since the UK’s vote for Brexit. Many supporters of Brexit argue that the UK’s regained flexibility to strike trade deals with other partners, and in particular with China given its economic size, will be a key advantage. This analysis indicates that a China-UK FTA will be neither as easy nor as clearly advantageous as portrayed by Brexit supporters.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: October 7, 2016
Read article More on this topic More by this author

Opinion

Alicia García-Herrero

The yuan's SDR entry is more symbolism than substance

The yuan's official entry into the International Monetary Fund's basket of reserve currencies on Oct. 1 raised expectations that central banks all over the world would be scrambling to stock up on Chinese money. But the reality is far from that.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 7, 2016
Read article More on this topic More by this author

Blog Post

pravakar

Goods and services tax: Landmark tax reforms in India

The complicated tax system in India with multiple rates is one of the most difficult issues investors and industry face. The new uniform tax rate aims to attract investors as well as create lower tax burdens for manufacturing firms and final consumers in India. However, a successful implementation of the goods and services tax (GST) will require an efficient IT infrastructure and capacity building of the entire tax administration.

By: Pravakar Sahoo Topic: Global Economics & Governance Date: October 7, 2016
Read article More on this topic More by this author

Opinion

Alicia García-Herrero

China's state-owned enterprises reform still lacking bite

China has gone through a remarkable transformation in recent decades but tough reforms have become rare, especially since the global financial crisis. Among the many reforms announced since President Xi Jinping's administration took office in March 2013, the most significant for China's economic outlook undoubtedly will be the reform of state-owned enterprises (SOEs).

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 4, 2016
Read article More on this topic

Blog Post

Alicia García-Herrero
DSC_0160

What does China’s ‘belt and road initiative’ mean for EU trade?

Much has been written about the Belt and Road initiative since Xi Jinping made it Beijing’s flagship initiative in September 2013. There are many interpretations of the initiative’s ultimate objectives, but one objective is clear. The belt and road scheme will bring huge improvements in regional and international connectivity through infrastructure upgrades and trade facilitation across a massive geographic area.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: September 20, 2016
Load more posts