Will the Tobin tax work in China? - Victor Shih

Victor Shih

China is preparing a Tobin tax, a tax on capital transactions. At this stage for a zero percentage, but the writing is on the wall. It´s effect on China´s currency depends very much on how the government is going to use this tool, says finance professor Victor Shih in Bloomberg.

Bloomberg:

PBOC Deputy Governor Yi Gang raised the possibility of implementing the punitive measure late last year in an article written for China Finance magazine. 

"If the PBOC makes it very clear that the Tobin tax will only apply to a narrow range of high frequency capital account transactions, it may not be contrary to the spirit of a freely usable currency," said Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance. If the tax is slapped on a wide rage of transactions, it will hurt the yuan’s international appeal. "In general, any such restrictions only deter investors from holding yuan assets," he said.

More in Bloomberg.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on managing your China risk? Do check out this list.  

Related articles

• Central bank moves in to ease turmoil - Victor Shih
• China's Subprime Crisis Is Already Here - -Bad Loans Soaring
• Defending yuan is costly for China