China's Capital Controls
Comments discuss China's strict capital controls to prevent outflow of yuan, capital flight via methods like US loans or bonds, trade surpluses accumulating dollars, and efforts to manage exchange rates and US treasuries.
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This feels like a way to export money from China.
doesn't that mean 'almost free foreign currency' for the Chinese? why block free money? it's not like yuan is leaking out...
Probably because it's a good way to funnel money out of China
the goal is supposed to be holding yuan outside china is impossible? or possible?
Companies, individuals, investors e.t.c. are moving their money out of the yuan back into the dollar, China is selling some of its treasuries to get the dollars to give to these people. I expect the vast majority of it is leaving the country.
China has 90% of their funds in US bonds by now (called dollars), and what good does that do them ?
When they export, money gets in. But they don't import much , if you look at china's trade balance, it's at + 421 billion dollars [1] (money going in) while USA is at -616 B [2].So it's in fact hard to get money out of china.[1] https://www.statista.com/statistics/263632/trade-balance-of-...[2] <a href="https:/&#
Makes sense. China doesn't want any Yuan going to a US company.
China is no longer a net buyer of Treasuries. They have begun to sell off their position over the last 5 years. And the renminbi is actually quite strong lately, the Chinese government is maintaining positive interest rates and allowing corporate defaults instead of money-printing.
More likely trying to get money out of China. Getting a US loan against your Chinese assets is a good way to do that.