{"id":7568,"date":"2015-04-25T07:15:08","date_gmt":"2015-04-25T12:15:08","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7568"},"modified":"2015-04-25T07:15:08","modified_gmt":"2015-04-25T12:15:08","slug":"china-could-face-sharp-rise-in-capital-outflows-if-stocks-economy-lose-momentum","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7568","title":{"rendered":"China Could Face “Sharp” Rise In Capital Outflows If Stocks, Economy Lose Momentum"},"content":{"rendered":"

China Could Face “Sharp” Rise In Capital Outflows If Stocks, Economy Lose Momentum<\/a><\/h3>\n

We\u2019ve written quite a bit over the past two months about capital outflows from China. Last week for instance, we\u00a0documented<\/a>\u00a0how the country saw its fourth consecutive quarter of outflows in Q1, bringing the 12 month running total to some $300 billion. Why, beyond the obvious, is this a problem for China? Because pressure is mounting to devalue the yuan as the currency\u2019s peg to the recently strong dollar is becoming costly for the country\u2019s export-driven economy.<\/p>\n

Here\u2019s Soc Gen\u2019s\u00a0Albert Edwards<\/a>\u00a0on the subject:<\/p>\n

\n
In the current deflationary environment the Chinese authorities simply can no longer tolerate the continued appreciation of their real exchange rate caused by the dollar link.<\/em><\/div>\n<\/blockquote>\n

And from Barclays:<\/p>\n

\n
Amid slowing inflation and rising outflows, the costs of limiting CNY weakness are growing \u2013 including the unintended effect of placing more stress on CNY market liquidity and interest rates, rendering liquidity easing efforts less effective.<\/em><\/strong><\/div>\n<\/blockquote>\n

And here is how\u00a0we summed up<\/a>\u00a0the situation last month:<\/p>\n

\n
China is suddenly finding itself in an unprecedented position: it is losing the global currency war, and in a “zero-sum trade” world, in which global commerce and trade is slowly (at first) declining, and in which everyone is desperate to preserve or grow their piece of the pie through currency devaluation, China has almost no options.<\/em><\/div>\n<\/blockquote>\n

At issue is the fact that expectations about the direction of the yuan may be contributing to capital outflows and any indication on the part of Beijing that devaluation is in the cards could exacerbate the problem. Now, data from SAFE suggests nearly $24 billion left China in March alone. Here\u2019s more, via\u00a0Bloomberg<\/a>:<\/p>\n

 <\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

China Could Face “Sharp” Rise In Capital Outflows If Stocks, Economy Lose Momentum We\u2019ve written quite a bit over the past two months about capital outflows from China. Last week for instance, we\u00a0documented\u00a0how the country saw its fourth consecutive quarter of outflows in Q1, bringing the 12 month running total to some $300 billion. Why, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2045,4940,130,1099,1098,1784,353,2520],"class_list":["post-7568","post","type-post","status-publish","format-standard","hentry","category-economics","tag-beijing","tag-capital-outflow","tag-china","tag-currency-devaluation","tag-currency-wars","tag-exports","tag-gdp","tag-imports"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7568"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7568\/revisions"}],"predecessor-version":[{"id":7569,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7568\/revisions\/7569"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}