China's Monetary Stability and Financial Security Under Globalization

This paper examines China’s balance of payments, and then explores how and to what extent the balance of payments has affected the Chinese economy. After reviewing some essential policy adjustments in China, the paper then probes the internal, complicated relationship between China’s balance of payments and monetary stability. Finally, the paper recommends some measures that will maintain monetary stability and financial security in China, while permitting greater freedom of capital flows.

Although a profusion of international studies has been devoted to balance-of-payments issues, rather less attention has been paid to the balance of payments in China. Further analysis of the topic would have considerable actual significance for China, which still has to tackle some important unresolved challenges, specifically introducing greater freedom for capital flows and completing the reform of the RMB exchange rate mechanism.