China Capital Outflows Are Back, Some Funnier Than Others

China Capital Outflows Are Back, Some Funnier Than Others
A worker gathers coins thrown by tourists into a well to pray for good luck and wealth during celebration for Chinese New Year at White Cloud Temple in Beijing on Feb. 18, 2007. China's foreign exchange reserves are disappearing as fast as the coins. China Photos/Getty Images
Valentin Schmid
Updated:

While Chinese capital flows dominated headlines earlier this year, they have not garnered much attention since the end of February.

But as the yuan is slipping again against the dollar, outflows are back in May and the People’s Bank of China’s (PBOC) stash of foreign reserves declined as well (down $28 billion to $3,192 trillion).

Most of this was due to the so-called valuation effect, which decreases the value of assets in currencies other than the dollar as the dollar rises in international markets.

However, research firm Capital Economics estimates Chinese still moved around $30 billion out of the country. “An increase in outflows would seem to make sense given the weakening of the renminbi against the dollar last month,” the firm writes in a note to clients.

(Capital Economics)
Capital Economics
Valentin Schmid
Valentin Schmid
Author
Valentin Schmid is a former business editor for the Epoch Times. His areas of expertise include global macroeconomic trends and financial markets, China, and Bitcoin. Before joining the paper in 2012, he worked as a portfolio manager for BNP Paribas in Amsterdam, London, Paris, and Hong Kong.
Related Topics