M-RCBG Senior Fellow-Led Study Group: Longmei Zhang

Capital account opening and China’s external balance sheets 

Tuesday, October 4,  4:00-5:30 
Nye C (Taubman 5th Floor)

After four decades of rapid economic growth, China has become the world's second-largest economy and established intricate trade ties with the rest of the world. Nonetheless, China's financial integration is still in its infancy, primarily reflecting restrictions on cross-border financial flows. As the Chinese economy gradually shifts away from exports and towards domestic demand, a more flexible exchange rate regime has been introduced, creating room for capital account liberalization. This study group will examine the impact of capital control and financial development on China’s external balance sheets. By looking at cross-country experiences, we will also discuss how capital account opening and financial deepening may significantly increase China’s foreign assets and liabilities and influence the landscape of the international monetary system.

This study group is open to all. Registration is not required.

Longmei Zhang headshot with plants in backgroundLongmei Zhang is a senior economist at the International Monetary Fund and served as the Citi Visiting Chair in International Finance at Schwarzman College, Tsinghua University, before joining M-RCBG. From 2017 to 2020, she served as the IMF Deputy Resident Representative for China. In this capacity, she provides policy advice, co-leads the analytical work of the IMF Beijing office, and engages with academia and think tanks. Before that, she worked in the IMF Asia and Pacific Department based in Washington, D.C., focusing on macroeconomic forecasting, broader China rebalancing, and issues on high savings. She has also worked extensively on regional issues in the Asia Pacific and was engaged in IMF program negotiations and reviews in Romania. Longmei has published research in a wide range of areas, including long-term growth/middle-income trap, macroprudential policies, corporate leverage, capital flows and asset prices, digital economy, and fintech. She also co-edited the book “The Future of China’s Bond market,” which provides a comprehensive analysis of various segments in China’s bond market and reform needed. She was named a Young Global Leader of the World Economic Forum in 2019 and is a member of the Global Future Council on China. She holds a Ph.D. in Economics from Goethe University Frankfurt, a master’s degree in international relations from the University of Konstanz, and a bachelor’s degree in business administration from Shanghai Jiaotong University. As an M-RCBG Senior Fellow, her research will focus on how China’s increasing financial integration and the rise of the Renminbi will reshape the international financial architecture and implications for policy makers. Her faculty sponsor is Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at Harvard Kennedy School. Email: longmei_zhang@hks.harvard.edu