I sometimes hear this in a certain kind of political discourse, namely that in the "good old days" of Bretton-Woods capital controls were a thing (I don't dispute this) and that consequently the flow of jobs from the West/US to China (which more or less started at the time time of the abandonment of Bretton-Woods) would have been rendered much more difficult had the West kept B-W style capital controls.

Assuming that China had liberalized/opened their economy for exports and foreign investments in the same way that they did in the late 1970s and early 1980s, but the West had kept Bretton-Woods with all its trappings, what would have been substantively different? E.g.

  • Would a purely Chinese company exporting cheap plastics to the US have faced more barriers simply as a result of B-W capital controls in the West?

  • Would some European (or US) company that wished to start a factory/branch in China have experienced more barriers simply as a result of B-W capital controls in the West?

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    $\begingroup$ Annoying question: does this extend to "ROC" Taiwan? Would the intent be to prevent TSMC from having access to Western markets? Does this just cover China or is it also anti-Japan, Vietnam etc? $\endgroup$
    – pjc50
    Sep 4 at 10:59

1 Answer 1


China was an original member of the IMF that was created in Bretton Woods, NH.

China was a member since December 27, 1945.

The currency exchange rate regime created at Bretton Woods applied to China...

The IMF came into formal existence in December 1945, when its first twenty-nine member countries signed its Articles of Agreement. The countries agreed to keep their currencies fixed but adjustable (within a 1 percent band) to the dollar, and the dollar was fixed to gold at $35 an ounce.

link to the source

The Bretton Woods agreement was a fixed currency exchange rate agreement and an agreement to create the IMF and IBRD/World Bank for lending and development. The IMF would lend to governments. The IBRD would support reconstruction from WW2 and "developing" countries by lending.

The term "capital control" is usually meant to mean limitations on movement of liquid capital (money) and limitations on investment. Of what was in the Bretton Woods agreement, it seems only the currency exchange rate agreement is remotely similar to a capital control.

A managed currency exchange rate regime like the Bretton Woods agreement reduces volatility in the values of currencies but the end of Bretton Woods doesn't stop China or even a more market oriented country like Canada from intervening in currency markets as this 2022 headline indicates...

Yuan Plunge Nears 14-Year Low, Inviting Aggressive PBOC Pushback

link to the news article source

The "flow of jobs" from developed countries to China is mainly attributable to lower costs in tradeable goods manufacturing in China, much more so than attenuated currency volatility under Bretton Woods and subsequent PBOC currency interventions that also serve to attenuate volatility. This view is supported by the observation that since 2014 the PBOC has reduced its holdings of foreign denominated assets and yet China's trade surplus is significantly higher than it was in 2014.

A graph of PBOC foreign denominated assets measured in millions of USD...

pboc foreign assets

A graph of China's balance of trade measured in billions of USD...

china balance of trade

The decrease in the level of foreign denominated assets between 2014 and 2023 suggests that the PBOC does not have to continually issue CNY to buy foreign currencies in order for China's trade surplus to grow. So what happened to the earlier larger holdings of foreign denominated assets? Since total PBOC assets have not decreased, indeed the total is larger than it used to be, it means that domestic, or CNY denominated assets, have replaced some of those foreign denominated assets. In effect, the PBOC was a net buyer of its own currency between 2014 and 2023. In this period at least, that activity is quite the opposite of being a net seller of CNY in the currency market in order to increase exports and decrease imports.

A graph of PBOC total assets measured in hundred million CNY...

pboc total assets

China's manufacturing wage is 97k CNY per year which is 13.3k USD. In the U.S. the manufacturing wage is 55k USD per year on the basis of 26.53 USD per hour.

source for China manufacturing wage

source for U.S. manufacturing wage

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    $\begingroup$ "Of what was in the Bretton Woods agreement, it seems only the currency exchange rate agreement is remotely similar to a capital control." Have you considered googling some academic papers on the subject to see if maybe there were some capital controls in the system after all? $\endgroup$
    – Giskard
    Sep 4 at 19:14
  • $\begingroup$ @Giskard From page 519.. "The British government maintained a system of controls on resident outflows until as late as June 1979 " and yet people say the Bretton Woods agreement ended in 1971 because the gold convertibility commitment was broken. China controls capital flows today and the U.S. is introducing new control. cfr.org/in-brief/… $\endgroup$
    – H2ONaCl
    Sep 5 at 3:58
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    $\begingroup$ The Soviet Union also existed before and after the Berlin wall, are these two things also independent? $\endgroup$
    – Giskard
    Sep 5 at 5:38
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    $\begingroup$ In fact the wall is not a bad analogy: there was always some migration between the parts of Germany, but during the division a lot of people wanted to move from east to west, especially after the Marshall plan rebuilt the latter. To stop this, the GDR built the wall. Similarly, fixed exchange rates are hard/costly to maintain in the face of limitless convertibility of capital, but are easier if capital flows are controlled to some extent. $\endgroup$
    – Giskard
    Sep 5 at 5:43
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    $\begingroup$ While Breton Woods didn’t directly require capital controls, they proved to be necessary in practice for countries with weaker currencies in order to maintain the fixed exchange rate with the dollar, which was an explicit requirement. The fact that such controls were also used for other reasons before and after the Breton Woods regime doesn’t invalidate that statement. $\endgroup$
    – Mike Scott
    Sep 5 at 8:07

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