Cudre, SamuelHoffmann, Mathias2022-05-171610-2878http://hdl.handle.net/1885/265441We model capital flows among Chinese provinces. A version of the present value model of the current account (PVMCA) with non-tradable goods and a savings wedge accounts for around 80% of the variation in inter-provincial capital flows over the 1986–2010 period. The PVMCA also allows us to identify the channels of external adjustment in capital flows at the province-level: variation in intertemporal prices (domestic and international interest rates, the provincial real exchange rate) and intertemporal variation in quantities (output, investment and government spending). We find that cross-province variation in the importance of these channels is correlated with the importance of private and state-owned enterprises and demographic factors. We discuss implications of our results for global imbalances in capital flows.The authors gratefully acknowledge support by the Swiss National Science Foundation in the framework of the ProDoc project Capital Flows among Heterogeneous Economiesapplication/pdfen-AU© Kiel Institute 2017ChinaChinese provincesCapital flowsCurrent accountGlobal imbalancesExternal adjustmentPresent-value modelsRegional business cycles201710.1007/s10290-017-0278-02020-12-27