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Few events will be as significant for the world in the next 15 years as China opening its capital borders, a shift that economists and regulators across the world are now starting to grapple with.
One of the most significant events for the world during the next 15 years will be China opening its capital borders, an event that change the world’s economic structure.
China’s leadership are aiming to invest more overseas and less in domestic economy. China’s excessive amount of savings – as much as $21 Trillion will increasingly deploy overseas, a move that is now becoming easier as Premier Li Kequang relaxes capital-flow regulations.
There are some changes that are easy to envision: the Yuan making its way to into more corners of the globe, China’s giant bank increasingly shine at New York, London and Tokyo Skylines, and property prices all around the globe will feel the influence of Chinese buying.
Some are evaluating this process using terms of Historic Proportions, as China’s era will be marked by shifting from a large net importer of capital to one of the world’s largest exporters of capital. And the continuing opening of China’s capital account will also promote the trading of commodities in yuan, and boost China’s ability to influence their prices.
China International Capital Corp. economists led by Beijing-based Liang Hong, wrote in a note this month that “The integration of China - the world’s second-largest economy with the highest saving rate but still a low per capita income - into the global capital markets is an unprecedented event.”
One issue that is being brought into account is the relationships with the US, as David Dollar, who served as U.S. Treasury attaché in China and is now a senior fellow at the Brookings Institution in Washington puts it: If they’re going to be gradually opening up to be like the U.S., then vast amounts of money are going to flow overseas,”… “I would speculate that it favors the U.S. over everything else.”
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