Geopolitical Risk and China's Short-Term Cross-Border Capital Flows:Theoretical Mechanism and Empirical Analysis
In the complex international environment characterized by deglobalization,geopolitical risks have gradually become an important factor affecting global stability and development,constituting a significant risk to the management of capi-tal flows under China's high-level opening-up.This paper proposes a theoretical framework for analyzing cross-border capital flows that includes geopolitical risk,and conducts an analysis of the multiple impact mechanisms of short-term cross-border capital flows.Empirical testing is carried out using monthly financial data from January 2002 to December 2022,with the con-struction of a TVP-VAR model.The results demonstrate that geopolitical risk is an important factor influencing short-term cross-border capital flows in China,significantly and robustly affecting interest differentials,price differentials,and exchange rate expectations.The arbitrage space formed by the differentiation of the economic fundamentals of China and the United States is an important mechanism through which geopolitical risk influences short-term capital flows.Investor sentiment gener-ates significant demand for asset security in short-term capital flows,mainly affecting arbitrage mechanisms through pricing channels.Based on these conclusions,this paper puts forward corresponding recommendations.
Short-Term Cross-Border Capital FlowsGeopolitical RisksTVP-VAR
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