Economic Effects of Openness of Chinese Financial Services

Based on estimated tariff equivalents of financial services, this study employs the global simulation analysis of industry-level trade policy (GSIM) model to quantitatively simulate the economic effects of China's financial services openness. This study finds that the openness of Chinese financial services will lead to higher imports and exports but lower domestic sales. The openness of Chinese financial services will not be conducive to its output expansion and will lower the prices of domestic producers and consumers of financial services. Although the openness of financial services will result in losses in producer surplus, the net social welfare will improve. Additionally, we find that the economic effects of removing restrictions on market entry will be most significant, while barriers to competition will take a secondary role. This study expands the research scope of partial equilibrium models and provides a quantitative basis for prudently promoting the openness of financial services.