Reuters Chinese recently reported that the Institute of International Finance (IIF) released its recent report on China’s capital outflow. According to numbers that the IIF provided, China’s 2016 outflow reached a record high of US$725 billion, which was a US$50 billion increase over 2015. The same number in 2014 was only US$160 billion. In the past two years, both Chinese businesses and individuals accelerated their process of sending money overseas, partially due to the expectation of the Chinese currency’s depreciation. High capital outflow caused a US$320 billion decrease in China’s foreign exchange reserve. In 2016, the Chinese currency RMB saw a record depreciation of 6.5 percent against the U.S. dollar. The IIF also suggested that China may see a higher capital outflow in 2017 if U.S. companies move their money back to the States, which they may do if the Trump administration delivers on its promise of tax relief on the flow-back dollars. The IIF estimated a US$206 billion capital outflow from developing economies, with most of this amount coming from China.
Source: Reuters Chinese, February 2, 2017