The Curious Economist

Economic news for students

  • Home
  • Micro News
  • Macro News
  • IGCSE Economics
    • Teaching Resources
    • Key Concepts
    • Revision Questions
  • IB Economics
    • IB Economics Teaching Resources
    • Key Concepts
      • Micro
        • Supply and Demand
        • Market Failure
      • Macro
        • Economic Growth and AS/AD
        • Inflation
        • Unemployment
      • Global Economy
        • International Trade
        • Economic Development
    • Revision
      • Case Studies with Questions
      • Revision Lessons
      • Revision Questions
      • Economics Diagrams
        • Externalities
        • Market Structures
        • Economic Growth (AS/AD)
        • Protectionism
        • Exchange Rates
    • Real World Examples
      • RWEs by Topics
      • Real World Examples Top Trumps
    • Exam Technique
      • Intro to the IA
      • Model 15-Markers
      • IB Economics Paper 3 Exam Technique
  • IB Business Management
    • IB Business Management Teaching Resources
    • Revision Activities for IB Business Management
  • AI for Educators
    • The AI Classroom Chronicles
    • Poe for Educators
    • ChatGpt for Educators
    • Perplexity AI for Educators
    • AI ChatBots
  • About
News Ticker
  • [ May 13, 2025 ] Nigeria’s economy on a rapid rise but so are prices Economic News
  • [ May 12, 2025 ] Trade Win or Tariff Trap? Trump’s UK Deal Raises Questions on Costs and Growth Economic News
  • [ April 29, 2025 ] Sugar Tax Shake-Up: UK Plans to Target Milkshakes and Dairy Drinks Economic News
  • [ April 21, 2025 ] China’s Economy Grows 5.4% — But Can It Withstand Trump’s Tariff Tsunami? Economic News
  • [ April 15, 2025 ] U.K. Government Seizes Control of British Steel Plant Economic News
HomeAggregate Demand and SupplyChina’s Capital Control Conundrum: A Bid to Boost Foreign Investment!

China’s Capital Control Conundrum: A Bid to Boost Foreign Investment!

September 25, 2023 TheCuriousEconomist Aggregate Demand and Supply, Balance of Payments, Consumer and Business Behaviour, Economic News, Government Policy, The Global Economy Comments Off on China’s Capital Control Conundrum: A Bid to Boost Foreign Investment!
IB Business Management Teaching resources

China is making significant moves to attract foreign investment by easing its capital controls. In a bold step, China has allowed foreigners in its major cities, Shanghai and Beijing, to move their money freely in and out of the country. This decision comes in the wake of data revealing that foreign direct investment (FDI) in China had reached a record quarterly low, reflecting a dip in business confidence.

For our young business and economics enthusiasts, let’s unpack this. Capital controls are measures taken by a country’s government to regulate the flow of foreign capital in and out of the domestic economy. By relaxing these controls, China is signaling its intent to make the country more investor-friendly and boost its economic prospects.

The specifics? Foreign investors in the Shanghai pilot free trade zone can now remit their funds without any restrictions, provided the funds are “real and [legally] compliant” and pertain to their investments in China. This change, which kicked off on September 1, doesn’t apply to mainland Chinese nationals. Furthermore, Beijing has proposed similar regulations, aiming to facilitate cross-border fund flows for foreign businesses.

But why is China doing this? The nation operates with a “closed” capital account, meaning there are strict rules governing the movement of money across its borders. However, with the Chinese currency weakening and economic growth slowing down, there’s a need to attract foreign capital and stabilize relations with the West.

For our students, this is a lesson in how countries use economic policies to influence investment and trade. It’s a real-world example of how a nation’s decisions can shape its economic landscape and its position on the global stage.

THINK LIKE AN ECONOMIST!

Q1. Explain two ways that increased FDI can increase AD in an economy.

Q2. Analyse the impact that increased FDI is likely to have on the long-run potential output of the Chinese economy.

Q3. Discuss whether or not  policies to incentivize FDI are good for a domestic economy.

Click here for the source article

Share this:

  • Tweet
  • capital account
  • capital controls
  • China
  • FDI
  • Macroeconomics
Previous

Swiftonomics Strikes: Taylor Swift’s Tour Boosts Hotel Bucks!

Next

Lego’s Green Brick Road: The Challenge of Finding Sustainable Materials!

Related Articles

Aggregate Demand and Supply

India’s Economy Shines with Robust Growth of 8.4%

March 4, 2024 TheCuriousEconomist Aggregate Demand and Supply, Economic Growth, Economic News, Macro Comments Off on India’s Economy Shines with Robust Growth of 8.4%

India’s economy surged impressively at the end of 2023, marking a significant growth spurt with an 8.4% increase in GDP in the last quarter compared to the same period the previous year. This growth outpaced […]

Share this:

  • Tweet
Consumer and Business Behaviour

Swiss Voters Greenlight Global Minimum Tax and Ambitious Climate Law

June 20, 2023 TheCuriousEconomist Consumer and Business Behaviour, Economic Growth, Economic News, Government Policy, The Global Economy Comments Off on Swiss Voters Greenlight Global Minimum Tax and Ambitious Climate Law

Swiss voters have made a significant decision to introduce a global minimum tax on businesses and a climate law targeting zero emissions by 2050. In a national referendum, 79% voted to raise the business tax […]

Share this:

  • Tweet
an image show China's negative economic growth
Aggregate Demand and Supply

China’s economy has reduced in size for the first time in decades

April 17, 2020 TheCuriousEconomist Aggregate Demand and Supply, Consumer and Business Behaviour, Economic Growth, Economic News, Government Policy, The Global Economy Comments Off on China’s economy has reduced in size for the first time in decades

China’s unbelievable economic growth streak of over forty years has finally come to an end today, with the world’s second largest economy recording a negative growth rate of -6.8% in the first quarter of 2020. […]

Share this:

  • Tweet

Please follow & like us :)

RSS
Facebook
Facebook
fb-share-icon
Twitter
Visit Us
Follow Me

Recent Posts

  • Nigeria’s economy on a rapid rise but so are prices
  • Trade Win or Tariff Trap? Trump’s UK Deal Raises Questions on Costs and Growth
  • Sugar Tax Shake-Up: UK Plans to Target Milkshakes and Dairy Drinks
  • China’s Economy Grows 5.4% — But Can It Withstand Trump’s Tariff Tsunami?
  • U.K. Government Seizes Control of British Steel Plant
  • U.S. Tariffs on China Surge Past 100% as Trump Escalates Trade War – but why?
  • Can Defense and Housing Turn the Tide on Sluggish GDP Growth in the UK?
  • PepsiCo Plans $1.95 Billion Poppi Acquisition
  • South Africa Unveils $54.5 Billion Infrastructure Plan to Boost Growth
  • Canada Pulls U.S. Alcohol from Shelves in Retaliation for Trump Tariffs

Tags

A-Level aggregate demand AI business behaviour BUSINESSES China Consumer Behaviour CONSUMPTION coronavirus COSTS CURRENT ACCOUNT DEMAND ECONOMIC GROWTH ENVIRONMENT Export externalities FDI fiscal policy gdp GLOBAL ECONOMY Government intervention government policy government spending IGCSE India INFLATION INTEREST RATE investment jobs LABOUR labour market Macroeconomics MARKET FAILURE Microeconomics MONETARY POLICY OIL prices protectionism SDGs SUPPLY Tax trade UK UNEMPLOYMENT USA

Most Read Article

Balance of Payments

Kenya and the US look set to sign a free-trade deal despite Trump’s attacks on global trade

February 7, 2020 Comments Off on Kenya and the US look set to sign a free-trade deal despite Trump’s attacks on global trade

Under President Trump, the US stance towards global trade has become increasingly protectionist, with billions of dollars of tariffs placed on goods from countries all over the world, engagement in a devastating trade war with […]

Share this:

  • Tweet
Economic News

U.K. Government Seizes Control of British Steel Plant

April 15, 2025 Comments Off on U.K. Government Seizes Control of British Steel Plant

It’s a dramatic move—but one the U.K. government believes is essential for national economic security. In an extraordinary step, the government has taken control of British Steel’s Scunthorpe plant under emergency legislation to prevent its […]

Share this:

  • Tweet

SGD News

Economic News

Nigeria’s economy on a rapid rise but so are prices

May 13, 2025 Comments Off on Nigeria’s economy on a rapid rise but so are prices

Nigeria’s economy grew 4.6% year-on-year in Q4 2024, marking its fastest expansion in a decade. According to the World Bank, the full-year growth rate reached 3.6% and is expected to continue in 2025. This is […]

Share this:

  • Tweet

Copyright © 2025 | MH Magazine WordPress Theme by MH Themes