Investors and companies are increasingly withdrawing funds from China and selling the renminbi, which shows their concerns about China's economic growth prospects. This situation may hinder the efforts of the Chinese government to promote the economy. According to new data released by the People's Bank of China on Tuesday, the balance of foreign exchange holdings of domestic financial institutions in China decreased by 3.8 billion yuan (about 597 million US dollars) from the previous month, indicating that Chinese export companies no longer convert US dollars into RMB, and some investors The funds are being drawn from China. In the past 10 months, Chinese banks have become net sellers of US dollars for five months. During this period, the amount of corporate settlements reached only RMB 145 billion, which is much less than the foreign exchange balance (equivalent to RMB 905 billion) that flows into China through trade surplus. This is in stark contrast to what has happened in most of the past 10 years: the market’s confidence in China’s economic growth and its hunger for the renminbi meant that not only did the Chinese banks acquire all the foreign exchange balances achieved through the trade surplus, but also A large amount of speculative capital flows into China, which is called "hot money." In the first 10 months of 2008, the net increase in the amount of RMB invested by Chinese banks through the acquisition of foreign exchange reached 3.6 trillion yuan. In the past, the inflow of large amounts of capital into China was a key factor that led to the loss of control of Chinese banks' loans, rising asset prices, and appreciation of the renminbi. Right now, funds are flowing out of the country, which is the reason for the decline in prices of a series of assets such as real estate, stocks and renminbi. At the same time, capital outflows have led to a rise in the price of luxury homes in Hong Kong, while allowing Chinese buyers to travel to real estate markets such as London, Singapore and San Francisco. IT consultant Calvin Sheng recently spent $2.5 million to purchase an apartment in Melbourne, Australia. He said that I went to the bank to redeem the Australian dollar needed for the down payment and then transferred the money to Australia. I plan to study in Australia. You can think of this as a balanced investment to prevent any downside risks to the Chinese economy. He said that he is concerned about China's foreign exchange control measures, but not everyone is as cautious as he is. The Chinese government imposes strict control over the flow of capital into and out of the Chinese economy, but short-term speculative funds are often able to escape strict monitoring. The change in the balance of foreign exchange payments allows us to understand the direction of hot money flow. The decline in the amount of money flowing into China's financial system means that the situation in the money market is further tightened, and banks are more difficult to lend. It is even more difficult for the Chinese government to promote a weak Chinese economy. Since the beginning of the year, the People's Bank of China has injected more than 1.4 trillion yuan into the Chinese financial system, but the number of bank loans has not increased significantly. Chinese government researcher Zhang Ming recently said in a research report that from the second half of 2011, the deteriorating European debt crisis, the impact of the global financial system and deleveraging led to the flow of funds to safe assets, short-term capital. Outflows from emerging markets flooded into the United States. These factors have hit the Chinese economy. This includes funds that are increasingly inclined to transfer funds to private investors abroad, but it is difficult to determine the exact amount of funds transferred. A survey of 2,600 high-net-worth individuals in a 2011 report by China Merchants Bank and Bain & Co. showed that nearly 60% of people have completed investment immigration or are considering investing in immigrants. Hong Kong media worker Ann Li has just purchased an apartment in Hong Kong. Hong Kong is China's territory, but it has its own laws and is not subject to Chinese capital control. Ann Li said that we think this is a good asset allocation. My parents have real estate and investment in the Mainland, so we bought this house in Hong Kong. We also have concerns about property rights and China's political prospects. Rupert Hoogewerf, the founder of Hurun Report, who tracks China's elite wealth, says the rich in China are looking to diversify their wealth. He said that Chinese entrepreneurs are investing in commercial real estate and stocks, and they make personal investments in the real estate sector, mainly in the US and Hong Kong. He said that this trend is likely to continue in the next 10 years. The strong demand for the US dollar has also contributed to a major shift in the direction of the RMB exchange rate. Since the beginning of this year, the yuan has fallen by 0.7% against the US dollar, which is still the case when the Chinese central bank withstood market pressure and did not further depreciate the renminbi. It is rare for the central bank to fall into such a situation. China still firmly controls the renminbi and controls the daily trading range of the renminbi in the domestic market to a very narrow range. But within this range, investors can pressure the yuan to appreciate or depreciate. Analysts say many Chinese domestic companies are choosing to hold US dollar foreign exchange earnings instead of the yuan, which has reduced the size of Chinese banks' purchases of foreign exchange. He Weizhen, a currency strategist at Citibank, said that companies’ confidence in China’s economic outlook has weakened, so they hold more dollar income. As the renminbi continues to depreciate, I think this trend will not change in the coming months. Capital outflows are also a cause of the decline in Chinese asset prices. The Shanghai Composite Index fell 17% from the same period last year. House prices have also fallen, which also reflects the government's efforts to cool the property market. In Hangzhou, the capital of Zhejiang Province, the richest province in eastern China, the price of luxury apartments has dropped by 8% in the past year. The reduction in asset bubbles is beneficial to the Chinese economy in the long run. But as the government focuses on promoting growth, falling asset prices may dampen investor confidence and enthusiasm. According to data from the data provider CapitalVue, the amount of funds raised by Chinese companies in the first seven months of this year fell by 35% year-on-year, while the new residential building area fell by 13.4% year-on-year. China’s trade surplus and foreign direct investment mean that foreign funds are flowing into China almost continuously. In the past, expectations for the appreciation of the renminbi meant that these funds would soon be converted into renminbi. The monthly data of the bank's purchase of foreign exchange records these transactions. The purchase of foreign exchange is lower than the monthly flow of funds into China through trade and investment. This either means that hot money flows out, or that the company has decided to hold US dollar foreign exchange earnings.
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