On the surface, China’s capital outflows were only $30 billion in May, far below the $100 billion clip seen earlier this year.
So all is well in China? Not quite. We have seen that anecdotally people still strap cash around their waists and try to smuggle it across the border.
Chinese companies still make strange acquisitions to be able to move capital to other countries, like a home appliance maker buying an Italian soccer club.
Another statistic is quite telling that not all is as it seems. Chinese imports from Hong Kong skyrocketed 242 percent in May compared to last year and 21 percent compared to last month.
Why is this strange? Because Hong Kong exports to China (exactly the same thing, except that it’s a different agency reporting the numbers) have been falling this year, like 4.8 percent year over year in April. Also, total imports including Hong Kong were down 10.3 percent over the year.
“Another interesting contrast is the trade data of Hong Kong, though it has not come out for May yet, Hong Kong exports to China has contracted for 12 months when for most of the time China imports to Hong Kong was rising,” wrote investment firm Natixis in a note to clients.
