As investors flee a collapsing currency and failing economy, cash is fleeing China’s financial markets at the quickest rate in years, and analysts point to signals that additional money is being transported out of the nation through back routes, indicating a further drop in confidence.
The movements, which are primarily out of the bond market, reflect the allure of higher interest rates abroad.
However, their scale and hints that they are extending beyond foreigners’ portfolios reflect domestic confidence fragility – a possible drag on the yuan in the future – and the magnetic influence of a rising US dollar on global capital flows.
“It’s not only international asset managers that are no longer investing in China; undocumented outflows are worsening,” she says as confidence dwindles. “People want to withdraw their money.”
This year, the yuan has lost more than 11% of its value against the US dollar.
Unlike the majority of its global rivals, China is lowering lending rates to help its rapidly declining economy. The housing market, where most Chinese people invest their money, is in a slump, and youth unemployment is at an all-time high.