Closing off its capital markets makes China a currency manipulator and costs US jobs, according to the Economic Policy Institute and others. So urge China to open its capital markets. The EPI should be careful what it asks for.
Capital controls mean that the assets of Chinese savers (household and business) are not diversified: no foreign assets. Furthermore, domestic financial repression (typical of developing countries with immature capital markets) means that for two decades the return on savings has been below inflation – hence the attractiveness of real estate in a nation of first-time investors. So if China ends capital controls, we will see a vast demand for foreign assets, among which the US dollar is the one they know. We can look to what happened to the Japanese yen as capital controls were removed starting in 1980: a big depreciation.
In China’s case, that should be set against a decade in which the yuan appreciated by 1/3 (BIS real trade-weighted exchange rate data). There’s no winning: if you’re accused of stealing jobs when the yuan is appreciating, just imagine the charges that would fly if it depreciates.