This period can be roughly divided into three stages: The “retaking” can be seen in the policies demanding that various foreign exchange incomes must be sold to the State so that planned distribution can be implemented through foreign exchange, and the “delegation” can be seen in the “sharing of foreign exchange earnings” policy. Along with the economic system undergoing three major adjustments regarding the retaking and delegation of management powers, the allocation of foreign exchange resources changed accordingly. The basic context of this period is where, under the planned economy system, the central government implemented highly centralized, directive-based and planned management of receipts and payments in foreign exchange, and there was no foreign exchange market. The first historical period is the 29 years from 1949 to 1978, which witnessed the difficult process of exploration. Based on their developmental characteristics, each historical period can be divided into several stages. Historical evolution of China's foreign exchange market developmentĭuring the 70-year history of the new China, China's foreign exchange market underwent three periods, namely, a difficult exploration period, a formation and development period and an innovative development period. However, it is ultimately determined by the inherent requirements of economic development and the level of internationalization. China's 70-year practice has proven the foreign exchange mechanism relies on and serves the real economy and is severely restricted by the economic system. In contrast, the marketized formation mechanism of the exchange rate system took its first decisive step after the exchange rate reform in 2005, and it still needs to be further reformed. After the reform and opening-up in 1978, the foreign exchange market grew gradually in the process of institutional transformation and took its initial form from 1994 onwards. In fact, although China did not have an open foreign exchange market before the reform and opening-up, it had a clear foreign exchange management system and exchange rate system. The subtext of such argument is that China did not have (or hardly had much of) a foreign exchange mechanism during this period, which is clearly in conflict with historical evidence. It is argued that during the 30-year planned economy that preceded reform and opening-up, China pursued a closed-door policy with few international economic exchanges. During the 70-year history of the new China, as an indispensable economic resource in China's economic development, the foreign exchange mechanism bolstered each stage of economic development and was always an important manifestation of China's economic sovereignty. International economic exchanges require foreign exchange, which gives rise to the existence and development of the foreign exchange market. In the present world, the development of almost every country is closely linked to the international community, which is the result of the heterogeneity in system, market, humanity and history, in addition to the differences in natural resource endowments and the diversity in technology, administration, information, experience and diplomacy. Originally published in Simplified Chinese in Economic Perspectives. The full terms of this licence may be seen at. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Ĭopyright © 2020, Economic Perspectives License (2020), "70 years of China's foreign exchange market development: history and experience", China Political Economy, Vol.
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