Yesterday, Zhou Xiaochuan was quoted by Caixin as saying that the renminbi will be freely convertible soon. “We are now not too far from our goal of capital account convertibility,” the outgoing chief of the central bank told the influential Chinese magazine. Today, the currency is convertible only on the current account.

A fully convertible yuan, as the renminbi is informally known, would be a milestone for China, allowing Beijing to challenge the dollar as the world’s reserve currency. And free capital flows would inevitably transform the Chinese economy in many ways, almost all of them for the better.

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