China’s Financial Reforms To Proceed; Renminbi Internationalization At Forefront

Chinese authorities continue to press ahead with their complex structural reform agenda and the process will represent the most important economic trend for the regional outlook. 

Internationalization of the renminbi is at the forefront, as the exchange rate will play an important role as a shock absorber for other economic adjustments. 

Interest rate liberalization will likely be completed in the near term as market-determined rates are a prerequisite for a smooth opening of the capital account, says Scotiabank. 

Meanwhile, international access to Chinese capital markets will increase, though this process will likely be gradual. Global investors are paying attention to the growing role of China as an active issuer of corporate debt securities and the associated uncertainties linked to refinancing risk once interest rates in the US rise; in fact, China has now become the single largest credit in the emerging market corporate bond index.