Internationalization of the RMB , Capital Market Openness and Financial Reforms in C hina

This paper provides an overview of C hinese financial and trade integration in recent decades, and the challenges facing C hina in the coming years. C hina had been a prime example of export‐led growth, benefiting from learning by doing, and by adopting foreign know‐how, supported by a complex industrial policy. While the resultant growth has been spectacular, it comes with hidden but growing costs and distortions. The C hinese export‐led growth path has been challenged by its own success, and the global financial crisis forced C hina toward rebalancing, which is a work in progress. Reflecting on the internationalization of the CNY , rapid acceleration of the commercial internationalization of the CNY is expected. In contrast, there are no clear‐cut reasons to rush with the full CNY financial internationalization: the gains from CNY financial internationalization are overrated.