The Cross-Border Capital Flow Risks Faced by China and Its Countermeasures under the Strong Dollar Cycle
This paper analyzes the typical facts of how the strong dollar cycles in the two phases of 2015-2019 and since 2022 have impacted the cross-border capital flows in China.By comparing these two phases,it points out that China's cross-border capital flows may face the risks of further intensified outflows,reduced inflows and significant depletion of foreign exchange reserves in the future.Considering the changes in domestic and international environ-ments such as the slowdown of China's economic growth,the inversion of China-US interest rate differentials,con-tinuous depreciation of the RMB,significant declines in asset prices and increased future economic uncertainties,this paper proposes an optimized strategy to mitigate the risks of cross-border capital flows,which is different from the past:the first is to,continue to improve the macro-prudential management framework for cross-border capital flows;the second is to,continuously enhance the ability to identify,monitor and prevent systemic risks;the third is to,focus on and guard against the outflow of cross-border capital through unregulated financial institutions;the fourth is to,facili-tate the dual circulation of domestic and international markets and promote the balanced development of cross-border capital in both directions;the fifth is to,strengthen international regulatory cooperation and build a regional financial safety net.
Cross-Border Capital FlowsStrong Dollar CycleFinancial Safety NetMacro-Prudential Manage-ment
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