Opinion: China's financial markets enter global arena

Investors worldwide are pinning their bets on China's economic direction and capital outflows amid a fluctuating currency and volatile stock market. Simultaneously, firms and individuals are undertaking different approaches to diversify their investments. China is aware of its growing importance in the global markets, so talk of major capital controls is unlikely to materialize. Instead, what is more likely is a series of micro reforms to encourage inflows and curb outflows. As the government continues to control most economic levers, it is able to activate targeted measures to restrict capital leaving its borders. The real test is, however, whether these smaller changes are sufficient to steer the country in the right direction and have the desired stabilizing effect.

At an individual level, the Chinese are investing in foreign property, but also purchasing life insurance products and other assets as a way of hedging their bets. There are clearly those who are concerned about keeping their assets in China. Certain programs, which enable the Chinese to invest offshore, have reportedly been suspended to curb the flight of capital, and payment channels, such as the use of Unionpay for insurance transactions, are being tightened.