China's Financial Transition at a Crossroads

Edited by Charles Calomiris

Columbia University Press

China's Financial Transition at a Crossroads

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Pub Date: July 2007

ISBN: 9780231141925

432 Pages

Format: Hardcover

List Price: $65.00£54.00

Pub Date: July 2007

ISBN: 9780231512091

432 Pages

Format: E-book

List Price: $64.99£54.00

China's Financial Transition at a Crossroads

Edited by Charles Calomiris

Columbia University Press

China's increasing role in global economic affairs has placed the country at a crossroads: how many and what types of international capital-market transactions will China permit? How will China's financial system change internally? What kind of relationships will the Chinese government develop with foreign financial institutions, especially with those based in the United States? Can China broker a sustainable partnership with America that will avoid sending economic shock waves throughout the world?

Drawing on the contemporary research of prominent international scholars, the experts in this volume outline the trajectory of China's financial markets since the advent of reform and anticipate their uncertain future. Chapter authors and commentators include Geert Bekaert, Loren Brandt, Lee Branstetter, Mary Wadsworth Darby, Michael DeStefano, Barry Eichengreen, Campbell Harvey, Fred Hu, Xiaobo Lu, Christian Lundblad, Ailsa Roell, Daniel Rosen, Shang-Jin Wei, Jialin Yu, and Xiaodong Zhu.

The book begins with an overview of the history of financial-sector development, regulation, and performance and then focuses on the banking sector, discussing the progress, challenges, and prospects of current sector reform. Subsequent chapters describe the role of foreign capital in China's development and analyze the changes in capital flows and controls over time; explore various explanations for China's composition of foreign-capital and foreign-exchange policies, particularly the factors shaping China's reliance on foreign direct investment; and provide an international, comparative perspective on the remarkable growth experience of China and the contribution of its institutional environment to that experience.

Contributors dispute the belief that stock market listing has done little to reform state-owned enterprises and take a hard look at the exchange rate regime choice for China, considering the potential long-run desirability of flexibility and the appropriate sequencing of reforms in foreign-exchange policy, domestic banking reform, and capital-market openness. The book concludes with a roundtable discussion in which prominent economists, including Peter Garber, Robert Hodrick, John Makin, David Malpass, Frederic Mishkin, and Eswar Prasad, debate the pace of the appreciation of China's currency and the likely consequences of that policy within and outside of China.

A must read for economists, finance professionals, development experts, political scientists, and sociologists interested in the economic transformation of China and the phenomenon's wide-ranging implications.

Ross Levine, Brown University

This extremely useful book gives the perspectives of leading academic economists on China's difficult transition to financial liberalization. It will be an extremely useful reference for anyone trying to understand Chinese financial systems as well as the country's halting efforts towards financial liberalization. Collectively, the analyses underscore the fact that in a rapidly globalizing economy such as China's, there is just as great a risk to reforming financial markets too slowly as to reforming them too quickly.

Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy, Harvard University

"Pleasantly meaty and thought provoking." -Barron's

Leslie P. Norton, Barron's

An excellent overview of China's financial markets.

Richard N. Cooper, Foreign Affairs

A valuable collection.

Dwight H. Perkins, Business History

The data and scope of the analyses are impressive and add new weight to perhaps well-known conclusions.

Paul Bowles, University of Northern British Columbia, The China Journal
List of Acronyms
Acknowledgments
Introduction, by Charles W. Calomiris
1. China's Financial Markets: An Overview, by Lee Branstetter
Comment: Xiaobo Lü
2. China's Banking Sector and Economic Growth, by Loren Brandt and Xiaodong Zhu
Comment: Michael DeStefano
3. Understanding the Structure of Cross- Border Capital Flows: The Case of China, by Eswar Prasad and Shang- Jin Wei
Comment: Daniel H. Rosen
4. Financial Openness and the Chinese Growth Experience, by Geert Bekaert, Campbell R. Harvey, and Christian Lundblad
Comment: Mary Wadsworth Darby
5. The Effects of Stock Market Listing on the Financial Per for mance of Chinese Firms, by Fred Hu
Comment: Ailsa Röell
6. China's Exchange Rate Regime: The Long and Short of It, by Barry Eichengreen
Comment: Jialin Yu
7. China's Foreign Exchange Policy: What Will China Do? What Should China Do?, by
Peter Garber, Robert J. Hodrick, John H. Makin, David Malpass, Frederic S. Mishkin, and Eswar Prasad
Appendix 1. Regional Estimates of New Deposit and Loan Shares, and Nonperforming Loans, by Loren Brandt and Xiaodong Zhu
Appendix 2. Evolution of Capital Controls in China, by Eswar Prasad and Shang- Jin Wei
List of Contributors
Index

About the Author

Charles W. Calomiris is the Henry Kaufman Professor of Financial Institutions at Columbia Business School and a professor at Columbia's School of International and Public Affairs. He also serves as the academic director of the Jerome A. Chazen Institute of International Business and of the Center for International Business Education and Research at Columbia University. Calomiris codirects the Project on Financial Deregulation at the American Enterprise Institute. He is a member of the Shadow Financial Regulatory Committee and a research associate of the National Bureau of Economic Research, and he was a senior fellow at the Council on Foreign Relations. He also served as a congressional appointee to the International Financial Institutions Advisory Commission in 2000.