A flag flies near an oil reserve base on the seashore in Ningbo of Zhejiang Province, China.
A flag flies near an oil reserve base on the seashore in Ningbo of Zhejiang Province, China. - 
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Steve Chiotakis: Taiwan's legislature today approved a
landmark free trade agreement with China. The deal will bring the economies of the two countries closer together than they have ever been for half a century.

But the bigger news out of China today concerns its $2 trillion bond market. China's Central Bank says it'll open that market to foreign banks. What does that mean to you and me?

Here's Marketplace's Shanghai bureau chief Rob Schmitz.

ROB SCHMITZ: Why should you care that China's allowing foreign banks to invest in its bond market? The answer in a minute.

First, I'll let economist Ben Simpfendorfer explain why allowing foreigners to trade more yuan, China's currency, is important for your bank.

BEN SIMPFENDORFER: Ultimately, it will lead to full internationalization of the yuan, and there the impact on foreign banks will be significant. The yuan will likely become a global settlement currency, just as the euro, the dollar, and the yen are.

This means China's currency will rise, and that will impact you in a couple of ways: You might, number one, find a job -- labor will become more expensive in China and U.S. companies could move manufacturing back home. On the flip side, this means you'll most likely shell out more for everything from flip-flops to iPhones.

One economist is calling Beijing's move a "Big Bang" -- saying this is the first of wider reforms that will pave the way for a pile of foreign investment in China. Still, China is beginning with a quiet bang -- a small trial program.

And economist Simpfendorfer says it'll be years, if not decades, before China's currency is an international standard.

In Shanghai, I'm Rob Schmitz, for Marketplace.

Follow Rob Schmitz at @rob_schmitz