Regional Capital Mobility in China: 1978-2006

Yan, Isabel K. and Chan, Kenneth S. and Dang, Vinh Q.T. and Lai, Jennifer T. (2011): Regional Capital Mobility in China: 1978-2006. Forthcoming in: Journal of International Money and Finance , Vol. 30, (2011): pp. 1506-1515.

Abstract

We examine cross-region capital mobility in China and track how the degree of mobility has changed over time. The effects of fiscal and redistributive activities of different levels of government in China on private capital mobility are taken into account. Our results indicate that there was a significant improvement in capital mobility over time in China, particularly for private capital in the more developed regions. The central and provincial governments, via their taxation, spending, and transfers, loosen the relationship between private saving and investment and appear to promote capital mobility, particularly for less developed regions. There are considerable differences between more and less developed regions in terms of the degree of capital market integration and the improvement in capital mobility over time. The results have important policy implications on global re-balancing as well as regional development gap and risk-sharing within China.

• Item Type: MPRA Paper
• Language: English
• Keywords: Feldstein-Horioka; Chinese cross-region capital mobility; saving-investment relationship; Chinese capital market integration
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements

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