corporate sector and to allow more flexibility of the exchange rate. furthermore, capital account liberalization efforts have been affected by some actions implemented recently to tackle pressures on the renminbi, particularly those derived from tighter capital flow regulations and enforcement, such as restrictions on the purchase of foreign currency by individuals and more strict limits on outbound foreign direct investment flows. 2. the domestic authorities have taken important steps towards the liberalization of the onshore renminbi ’ s exchange rate over the last few years. however, the overall framework still falls short of a fully supply and demanddriven renminbi market, and failing to effectively fill this void may continue to raise concerns about the possibility of government control over the currency ’ s valuation, particularly vis - a - vis the us dollar, for either stabilization or stimulative purposes. it is also important to consider that the transition to a more market - oriented foreign exchange regime may be difficult and subject to wide swings. indeed, the challenges deriving from a complex external environment are accentuated by domestic developments as the chinese authorities attempt to simultaneously achieve multiple relevant tasks, including a diminished role of the state in the allocation of resources in the economy, a shift in the growth strategy towards consumption and services and away from investment and manufacturing, as well as the tackling of a number of outstanding vulnerabilities. against such a backdrop, global investors may remain wary of trades in the renminbi. 3. while significantly developed over the last years, the domestic financial markets still need further depth, transparency, and sophistication, while the insufficient degree of connectivity with the global financial system continues to be reflected in low levels of foreign participation. this is observed across virtually all relevant markets. china ’ s stock exchanges figure among the world ’ s largest in terms of market capitalization, but foreign ownership at only slightly above 1 percent pales in comparison to those in other emerging markets such as brazil ( 30 percent ) and russia ( 23 percent ). likewise, china ’ s bond market, the world ’ s third largest, as attractive as it may be in terms of returns and risk, is dominated by domestic participants, as foreign participation remains low at around 2 percent. 10 of course, this is explained to a large extent by outstanding restrictions to foreign participation in domestic financial markets but, in light of their current features, it is reasonable to assume that demand factors may also be present. see zhang, z. et al. ( 2017 ) : “ china

assessment in this regard. first, it should be noted that such a process is inherently slow and lengthy, not necessarily linear and subject to important, and perhaps frequent, setbacks. thus, whatever perspectives there may be, they should be viewed from a long - term standpoint and paying particular attention to the overall trend as separated from specific, often one - off, developments. second, and closely tied to the previous point, the speed at which this process proceeds will be determined by the commitment and capacity of the authorities to implement the measures required to consolidate the renminbi ’ s role as an international currency commensurate with china ’ s importance in the world economy.