Investors used dubious methods to withdraw $45 billion from China
As the yuan depreciates against the dollar, huge amounts of cash are leaving the Chinese financial market, and in the first half of the year, net capital outflows from China’s stocks, bonds and private equity totaled $101 billion, writes Business Insider.
At the same time, according to China itself, the outflow of funds by almost half of this amount – $ 45.2 billion – is the result of “errors and omissions”, which most likely indicates illegal or semi-legal channels for withdrawing funds.
Since 2016, this was the largest annual outflow of investors from the Chinese market.
The main reason for it remains the fall of the yuan since the beginning of the year by 11% against the dollar. Unlike many other central banks in the world, the People’s Bank of China has decided not to raise, but to cut its lending rate to reverse the economic slowdown while fighting the housing debt crisis.
China’s overall balance of payments is positive as exports continue to outpace imports. But a few clues indicate that investors are looking for new ways to get money out of China and circumvent capital controls.
Indirect signs of this are increased requests for training in Hong Kong, a surge in the number of family offices in Singapore, a popular destination for Chinese businessmen, and an increase in purchases of dollar-denominated insurance products in Macau.