Outflows Are Back: China Sells $87B of Treasurys in November

China seemed to have caught a break in October, but capital outflows came back in full force in November.
Outflows Are Back: China Sells $87B of Treasurys in November
A guide standsin front of an electronic board at the entrance of a bank in Beijing on April 23, 2013. WANG ZHAO/AFP/Getty
Valentin Schmid
Updated:

China seemed to have caught a break in October, but capital outflows came back in full force in November.

According to central bank data, foreign exchange reserves fell $87 billion to $3.44 trillion. The drop is almost as large as the record of $94 billion set in August.

“The increased likelihood of a December Fed rate hike will also have added to outflow pressures,” Capital Economics writes in a note to clients.

The Dec.7 fixing for the Chinese yuan suggests these pressures persist in December.

The People’s Bank of China (PBOC) set the midpoint r ate at 6.3985 per dollar prior to market open, 0.21 percent weaker than the previous fix 6.3851, the lowest since late August.

Chinese capital outflows are a hot topic because until the trend reversed in 2014, the country just kept accumulating foreign capital to the tune of $4 trillion. It has been downhill ever since and total capital outflows could hit $1 trillion by the end of the year.

(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.
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