Heeding the call of finance

Financial openness will play a far more important role in the country's economic growth and stability in the next decade

One of the most contentious issues between China and Western countries, especially the United States, is the opening up of China's financial sector and revaluation of the renminbi. Western countries have urged China to open up its financial sector further, while China is cautious about the effects of financial liberalization.

China has enough reasons to be cautious. Even people very optimistic about financial openness cannot deny that, despite increasing national wealth in the long run, it could cause instability or even economic and political crises and thus harm economic growth in the short term. There is as yet no empirical evidence to support a robust relationship between financial openness and economic growth.