The 15th Five-Year Plan places renewed emphasis on expanding high-level opening up, with a specific focus on raising the level of capital account liberalization. This policy direction reflects China’s intention to align financial openness with the of global economic integration. As the scale and complexity of China’s cross-border financial activities continue to grow, capital account reforms are positioned as a strategic pillar supporting long-term competitiveness.

Executive Summary

• The 15th Five-Year Plan prioritizes high-level financial opening-up, with capital account liberalization positioned as a key driver of China’s long-term competitiveness and global economic integration.

• China’s cross-border financial activity has expanded significantly, with external financial assets and liabilities reaching USD 18.32 trillion by mid-2025, reflecting deeper global financial integration.

• Capital account openness has broadened across most categories, supported by regulatory simplification and expanded channels for two-way capital flows.

• Authorities are pursuing liberalization alongside stronger financial supervision, including enhanced macroprudential management, micro-supervision, and risk-mitigation mechanisms.

• Future reforms aim to balance inbound and outbound investment (“bringing in” and “going out”), improve market connectivity, and expand access for both institutional and individual investors.

• Overall, China seeks to advance capital account opening while maintaining financial stability, using improved foreign-exchange management systems and digital monitoring tools to manage cross-border financial risks.

Expanding the Scale of Cross-Border Financial Activity

China’s external financial position has strengthened significantly in recent years. By the end of the second quarter of 2025, total external financial assets and liabilities reached 18.32 trillion US dollars, representing an 18 percent increase from 2020. Cross-border capital account transactions managed by banks rose sharply as well, accounting for 41 percent of GDP during the first half of 2025. This expansion illustrates both the increasing depth of China’s financial integration and the heightened reliance of domestic enterprises on global markets for investment and financing.

Broadening Openness Across Capital Account Categories

According to international assessment frameworks such as those used by the IMF and OECD, China has achieved varying degrees of openness across more than 90 percent of capital account items. This progress has been supported by targeted regulatory optimization, including the simplification of administrative procedures and the gradual expansion of channels for two-way capital flows. These reforms have been instrumental in enabling enterprises and financial institutions to leverage domestic and international capital resources more effectively.

Strengthening the Regulatory Framework for Cross-Border Capital Flows

China’s regulatory authorities have pursued a dual objective: expanding openness while maintaining financial stability. Over the past five years, improvements to cross-border capital flow management have included enhanced macroprudential tools, upgraded micro-supervisory systems, and more refined mechanisms to mitigate external shocks. These measures aim to ensure that liberalization proceeds in a controlled and sustainable manner, particularly as global financial volatility becomes more frequent and unpredictable.

Balancing “Bringing In” and “Going Out”

Future reforms are expected to pursue a more balanced model of capital account opening that simultaneously supports inbound and outbound investment. This approach spans direct and portfolio investments and applies to both institutional and individual investors. A more comprehensive liberalization strategy will require coordinated development of financial products, deeper market connectivity, and continued improvement in institutional access frameworks. The goal is to build an ecosystem that supports cross-border financial activity while reinforcing systemic resilience.

Managing Risks Amid Higher Openness

The pace and structure of capital account opening must account for the higher volatility associated with financial-sector transactions. Unlike the current account, where flows are closely linked to trade in goods and services, capital account movements can be more sensitive to shifts in global interest rates, market sentiment, and geopolitical factors. To address these challenges, regulators are working to establish a foreign exchange management system that is more convenient and open, while also being safer and more intelligent through the use of digital technologies and real-time monitoring tools.

Outlook: High-Level Openness Supported by Robust Safeguards

China’s strategy for capital account liberalization is ultimately designed to align higher levels of openness with strong risk prevention capabilities. The continued development of a unified macroprudential and micro-supervisory framework serves as a foundational safeguard against cross-border financial risks. By integrating openness with stability, China aims to create an environment that attracts global capital, supports domestic economic transformation, and enhances its role in the international financial system.