China Shows Smaller Capital Outflows Compared to Previous Estimates

China registered smaller capital outflows in December compared to the previous month, based on newly released data, according to Natixis Research’s China Capital Flow Tracker.

Outflows for the Q4 are now estimated to have reached US$203 billion from Natixis’ previous estimate of $224 billion.

From an annual perspective, Natixis estimates the total outflow of 2016 to be $885 billion.

The currency composition of capital outflows in December has changed significantly as the RMB’s share is almost zero in December.

Foreign currency outflows remain larger (72%) for the whole of Q4. The share of RMB has reduced to 28%, as opposed to 36% in Q3.

From an annual perspective, Natixis estimates that US$617 billion (70%) leaves China in the form of foreign currency, with $268 billion (30%) in RMB.

In Q4, as was the case in Q3, only part of the outflows is reflected in a loss of foreign reserves.  This is related to the increasing share of RMB denominated outflows as well the large share on unrecorded outflows (net errors and omission).