Symposia on Challenges for Emerging Asia: Capital Flows and Quality Growth

• Author: David Cook,Frank Westermann,James Yetman
• DOI: http://doi.org/10.1111/1468-0106.12301
• Date: 01 May 2019
• Published date: 01 May 2019

INTRODUCTION

Symposia on Challenges for Emerging Asia: Capital

Flows and Quality Growth

David Cook

1

| Frank Westermann

2

| James Yetman

3

1

Department of Economics, Hong Kong University of Science and Technology

2

Institute of Empirical Economic Research, Osnabrück University, Germany

3

Representative Office for Asia and the Pacific, Bank for International Settlements

In this issue we are pleased to highlight work on contemporary economic issues in emerging Asia

that was presented at a set of research conferences hosted by City University of Hong Kong in 2018.

These issues include the continuing impact of global imbalances on Asian economies and their

capacity for economic advancement.

“The Chinese Economy in the New Era,”by Professor Lawrence J. Lau, was a keynote address at

a conference on “China's Economic Reforms: Where Do We Stand”held Dec 3rd and 4th, 2018.

This paper offers a high-level view of the successes of China's reform project through 2017. Further,

it emphasizes the challenges that the People's Republic faces going forward. The author concept ual-

izes the key issue facing policymakers as changing the focus of policy from the quantity of economic

growth measured by GDP toward the quality of growth. The quality of growth reflects the myriad of

ways in which growth can improve quality of life by increasing technological capacity, social equal-

ity and environmental conditions. The paper offers economic projections through to the distant

future.

Two additional papers, presented at the conference on “Current Account Balances, Capital Flows,

and International Reserves”on May 4th and 5th, 2018, focus on tools used by policy makers to man-

age the volume of financial inflows and outflows in Asia-Pacific emerging markets. “The Hoarding

of International Reserves: It's a Neighborly Day in Asia,”by Yin-Wong Cheung, Xing Wang Qian,

and Eli Remolona explores the decision by many policymakers in the region to hold large inventories

of foreign exchange reserves. This paper characterizes a “Catching up with the Joneses”effect in

which economies' decisions to hold reserves are positively affected by the holdings of neighboring

central banks. The authors consider the impact of some further refinements of neighborhood “Jones”

measures, in particular trade linkages and potential cross-exposure to regional crises. The paper

illuminates some of the underlying economic channels driving the accumulation of reserves in the

region.

Another paper on capital account management is “Alternate Instruments to Manage the Capital

Flow Conundrum: A Study of Selected Asian Economies,”by Rajeswari Sengupta and Abhijit Sen

Gupta. Volatile international financial flows create problems for policy-makers seeking macroeco-

nomic stability. The impossible trilemma prevents policy-makers from achieving both internal and

external balance with a single policy tool. The authors find that regional policy makers vary in terms

DOI: 10.1111/1468-0106.12301

Pac Econ Rev. 2019;24:185–186. wileyonlinelibrary.com/journal/paer © 2019 John Wiley & Sons Australia, Ltd 185