You can check in anytime you like, but you can never leave: The politics of China’s financial market opening

This chapter examines external financial liberalization in China – a process that began in earnest in the early 1990s, and rapidly accelerated following the listing of state-owned enterprises in overseas exchanges in the late 1990s and China’s accession to the WTO in 2001. The authors show that the process and sequencing of China’s opening of its capital markets to offshore market participants have led to a policy bias in favor of inbound capital flows and deep domestic political resistance to outbound capital flows. As the liberalization of outbound capital came relatively late in the game (proceeding in earnest in the mid-2000s), the coalition favoring the greater liberalization of outbound capital, comprised of Hong Kong–based financiers, the city’s policy-makers, the People’s Bank of China and (from time to time) some State Council–level leaders, has had to contend with an increasingly skeptical but loose coalition of onshore state and non-state actors. The latter include Mainland China’s banking and securities regulators, local governments in Shanghai and Shenzhen, domestic securities brokerages as well as an emerging financial regulatory regime favoring financial stability. Copyright © 2019 Ka Zeng.