The trade tensions between China and the United States are necessitating a number of transitions and reforms in China's financial market.

Because of the tensions, China's exports to the US and US dollar receipts are both expected to drop. This leaves a real-economy gap between production capacity and demand, and a financial gap between the outflow and inflow of cross-border payments.

This is why opening-up of the financial sector is so important, as fresh inflows from the capital account will help close the financial gap, or help buy time for the current account flow to balance.

Not only does China need such opening-up, the overseas financial community is also keen on gaining wider access to the Chinese financial sector.

Trade tensions often lead to higher uncertainty in emerging markets while pushing interest rates lower or into negative territory in developed markets.

China, however, is becoming an attractive combination of stability and return. In other words, the Chinese economy and financial sector are expected to be managed in a stable manner, while the interest rates and investment returns in the Chinese market are still decent.

The integration of China's real economy into the global market significantly promoted productivity and efficiency of Chinese enterprises, and those surviving the global competition are emerging as worldwide industry leaders. The opening-up of the Chinese financial sector will also follow this precedent: the competition between domestic and overseas market participants will bring more pressure on both sides, and driven by the same market forces, every player will be constantly evolving.

Such an industrial upgrading in China's financial sector has been noticed in the fixed income market. In the bond market, the launch in July 2017 of the Bond Connect - which allows investors from the Chinese mainland and overseas to trade in each other's respective bond markets - was a great success. It made domestic investors upgrade their investment strategies to incorporate overseas investors' views as quickly as possible.

At the same time, in the renminbi exchange market, short-only renminbi players are no longer active. The market realizes that renminbi FX is a two-way market and has its own drivers.

With more and more overseas money invested in China, the interests of the global community are more deeply linked and aligned with the Chinese economy. A well-performing Chinese financial sector will be appreciated by everyone, and bashing China will cease to be fashionable.

Besides private institutions and financial instruments, central banks and currencies are also in an escalated competition, in particular between Chinese and US monetary policies and between the renminbi and the US dollar.

In other words, China will not be tied to the world only via trade and direct investment, but also through financial markets.

The Federal Reserve and its monetary policy are now de facto forced to finance the US administration's trade policy, and the US dollar and global banking system are being weaponized as well. In such a scenario, the discipline of the People's Bank of China and its prudent monetary policy are increasingly valuable due to its proven credibility, backed by the higher leadership, and the internationalization of the renminbi is offering the world a responsible and mutually beneficial public good. It won't be surprising if China's financial policies and currency experience make new progress after the trade tensions.

Finally, the changes in the financial sector will have a positive impact on the real economy. A diverse community of participants requires a rules-based market, which is consistent with China's direction to make the market play a decisive role in the economy. Credibility, transparency and predictability will be increasingly required by both domestic and overseas participants, and more and more Chinese corporate and relevant stakeholders have to meet this requirement. Higher standards should not be viewed as an obstacle or restriction, but as a boost for best practices and excellence, which will lead to prosperity and stability for everyone.

The author is the head of Foreign Exchange and Local Market Strategy for Global Markets China, BNP Paribas.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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