This paper critically comments on the policy literature surrounding China�s exchange rate regime. It first seeks to expose as myths several popularly raised contentions regarding the dollar peg employed by China, including the belief that the RMB is clearly undervalued and that its value is...

Purchasing Power Parity (PPP) is an appealing theory of the determination of longrun equilibrium exchange rates as it is founded on the intuitive proposition that opportunities for arbitrage will not go unexploited. However, in practice, measuring PPP exchange rates is hindered by difficulties...

Since 2001, foreign investors have been permitted to acquire minority ownership stakes in China�s banks. This paper assesses whether there is any evidence of a cost efficiency payoff in those banks that have taken on foreign investment. Data Envelopment Analysis is first used to generate...

WTO entry in 2001 heralded a new stage in the reform of China’s banking sector. With the reality that foreign banks would be extended national treatment by the end of 2006, China’s banks faced the imperative to reform in earnest. They began reforms from a variety of different starting points...

Output growth volatility at the macroeconomic level reflects the impact of demand and supply-side shocks. These shocks differ in terms of the persistence of their impact on output growth with the former typically being responsible for cyclical fluctuations of the business cycle variety. This...

The Global Financial Crisis served to refocus attention on the potential for monetary policy to exert an impact on asset prices. In turn, asset price fluctuations were shown to exert a powerful impact on the real economy. In this paper we consider these linkages in the case of China. Using SVAR...

This paper begins by documenting a significant challenge for macroeconomic policy-makers in China, namely a spatial dimension that sees considerable asynchronization in business cycle fluctuations across the country’s 31 provinces. This asynchronization points to potential benefits from...

Amongst many economists, China serves as the foremost example of the benefits that developing countries can derive from being open to foreign direct investment (FDI). Since the early 1990s, China has, by a large margin, received more FDI than any other developing country. It has also experienced...

Capital account convertibility in China is on the rise. Some see the process as a means of circumventing domestic financial sector inefficiency while others view it as potentially exposing China to financial crises. In considering these different viewpoints, this paper attempts to quantify the...

The picture often painted is that foreign capital inflows in China and India are prominently linked to rapid growth at the national level, and contribute to widening income disparities at the provincial/state level. In this paper we revisit Krugman�s (1993) contention that foreign capital...