China must press on with a “trinity” of reforms to fully realize an open economy, Zhou Xiaochuan, Governor of the People’s Bank of China (PBOC) for the last decade-and-a-half, told financial magazine Caijing in what could be one of his last major interviews in the job. He said China must embrace free trade and investment, let the market decide the yuan’s value, and scrap capital account controls, adding that the three elements were interlinked and could not be separated. “It’s very clear that they are conditional on each other and none of the three can be spared,” he was quoted as saying in the interview.

Zhou has designed and promoted a series of economic liberalizations over the last 15 years, including freeing up interest rates at home and giving the yuan a nominal international reserve currency status abroad. Zhou has now reached the unofficial retirement age for Chinese officials and could step down when the Communist Party convenes its five-yearly National Congress in Beijing this week.

Reflecting on China’s opening up since the early 1980s, Zhou said China’s position in the global economy was the result of a combination of the three liberalizations. “No country can create an open economy with heavy foreign exchange controls, and an exchange rate set under capital account controls won’t be a true market equilibrium rate,” he said.

Zhou’s advocacy of economic liberalization comes amid concerns at home about the risks of a freer exchange rate and flow of capital in the aftermath of a stock market rout and rapid capital outflows two years ago. As a result of those concerns, the central government has imposed capital account controls to stem outflows and intervened in the yuan exchange rate through a “countercyclical” factor. But Zhou said China should not wait for “conditions” to be ripe to free up the exchange rate system, nor should China drag its feet for fear of mistiming other reforms, the South China Morning Post reports.

China’s foreign exchange reserves hit an 11-month high of USD3.1 trillion at the end of September – rising for an eighth straight month – in a fresh sign of economic stability. The purchasing managers’ index (PMI) rose to a five-year high last month, while retailers saw a double-digit increase in sales during the “Golden Week” holiday. But business activity in China’s services sector grew at its slowest pace in 21 months in September as the Caixin/Markit services purchasing managers’ index (PMI) fell to 50.6 in September.

Some economists now expect Beijing may soon relax controls on outbound payments and individual foreign currency purchases. Caixin’s composite manufacturing and services PMI fell to 51.4 in September from 52.4 in August and was at the lowest level since June.