Gradual and uneven, but happening:
More steps toward the internationalization of the China’s capital markets are likely. There is talk that in the coming months, China may allow foreign companies to list their shares on the Shanghai stock exchange. There may be efforts to encourage the Panda bond market (foreign companies issuing yuan bonds on the mainland). The development will take place under the guiding hand of China, for whom stability remains a guiding principle. This evolution will build institutional capacity, but a fully open capital account and full convertibility of the yuan still appears to be at least several years away. It is far premature to speak of a challenge to the greenback by the redback (yuan), though it continues to catch the fancy of many observers.
Much more here. Meanwhile, here is the latest on Chinese inflation, large wage increases, and the real exchange rate. This part is interesting:
China’s $6 trillion economy used to be heavily dependent on exports for growth. Exports still account for about one-fifth of the economy, after excluding goods that are merely imported to China for final assembly and then re-exported. But China’s economy has grown powerfully for the last two years mainly on the strength of investment-led domestic demand. That demand, partly fed by low-interest lending by state-owned banks, is another factor in China’s inflation.