Core Viewpoint - The development of offshore finance serves as a transitional arrangement to promote capital account opening, where the former is a means and the latter is the goal [1][12] Group 1: Relationship Between Offshore Finance and Capital Account Opening - Clarifying the relationship between offshore finance and capital account opening is essential, as there is a prevailing view that further capital account opening is necessary for the development of offshore finance [1][2] - The current state of China's financial openness shows significant progress, yet restrictions on short-term capital flows remain, affecting non-residents' confidence in the market [2][3] - The Chinese decision-makers are aware of the issues caused by capital account controls and have consistently pushed for capital account opening, balancing efficiency and safety [2][3] Group 2: Challenges and Historical Context - The 2008 financial crisis highlighted the vulnerabilities of the global financial system, leading to a reevaluation of rapid capital account opening in developing countries [3][4] - Historical experiences indicate that a fully open capital account can easily be impacted by external financial risks, creating a contradiction between the need for high-quality economic development and the increasing risks associated with opening [3][4] Group 3: Development of Domestic Offshore Finance - Developing domestic offshore finance is seen as an alternative path to capital account opening, allowing for high levels of openness and internationalization while managing external risks [4][5] - The lack of attention to offshore finance in the past was due to the expectation that capital accounts would gradually open with the growth of China's capital markets, but changing global conditions necessitate a reevaluation of this strategy [5][6] Group 4: Functions of Domestic Offshore Finance - Domestic offshore finance can serve as a testing ground for capital account opening, allowing for controlled experimentation in a less risky environment [8][9] - It acts as a buffer zone to mitigate external shocks and control internal risks, facilitating a gradual adjustment of capital flows [9][10] - The offshore financial market can also function as a training ground for Chinese financial institutions, enhancing their international competitiveness and regulatory capabilities [10][11] Group 5: Conclusion - Offshore finance is both a testing ground for capital account opening and a buffer against potential risks, while also serving as a training ground for the financial system [12]