Full convertibility of the yuan ruled out

"China fortunately has accumulated a massive amount of foreign reserves to allow it to weather some of this international capital-flows storm better than other countries would have be able to," said Austan Goolsbee, economic professor at the University of Chicago, and a former adviser to US President Barack Obama.

China has announced a series of measures to liberalize its capital accounts in recent months.

Earlier this month, the State Administration of Foreign Exchange said that it will launch a pilot system on Jan 14 to better monitor cross-border capital flow.

In November, the administration said it will clear the way for foreign investor capital to flow in and out of the country more easily by waiving and simplifying regulations.

And a pilot program was launched in Shanghai to allow yuan cross-border lending by onshore multinational corporations to offshore parent companies or related companies within the same group, viewed as another significant step toward liberalizing capital accounts.

"For some items under the capital account, once the government has made up its mind and implemented policies, they would be open for convertibility all together very quickly," Zhou said. But coordination between some foreign-exchange policies and other regulatory rules - for example, the imposition of an export tax - will take some time, he added.

"As underscored by the lessons from emerging market financial crises in the last 20 years, sequencing of reforms is crucial, and the right sequence is to introduce substantial exchange rate flexibility before opening up the capital account to financial flows in a major way," said Louis Kuijs, chief China economist at the Royal Bank of Scotland Group and a former World Bank economist.

wangxiaotian@chinadaily.com.cn