From closed to open door policy: An empirical study of Chinas international capital mobility, 1958-98

This paper employs the intertemporal consumption smoothing approach to the current account to measure the effective degree of Chinas international capital mobility during the period 1958-98. In contrast to all previous known country studies using this framework, the hypothesis that capital has been at least mobile enough to allow for full consumption smoothing behavior is rejected. Also, although there is clear evidence of a drastic increase in mobility following the introduction of the open door policy in the late 1970s, the result indicate that there remain effective barriers to Chinas international capital movements.