Indeed, the development of deep and liquid hedging markets is one of the reasons why Australia’s experience with capital account liberalisation and exchange rate flexibility has worked out well. When we first moved from a fixed, to a managed, to a floating exchange rate regime in the 1970s and 1980s, these markets were not particularly well developed, but they have since matured significantly.
In large part, this occurred organically in response to the increase in demand for hedging products that arose once the exchange rate became more variable. This may well be the case for China too.