Natixis: China’s Net Capital Outflows Continue at a Steady Pace

China’s net capital outflows in the third quarter of July reached US$158 billion, slightly more than the second quarter’s $152 billion, according to Natixis’s latest China Capital Flow Tracker.

“When comparing the performance of our tracker with official balance of payment statistics, we can conclude that the quick reduction in outflows experienced in Q1 (which was predicted by our tracker) will probably revert in Q2, and perhaps also in Q3 based on July data,” noted Natixis.

The scale of both USD and RMB outflows do not change much from last month, according to Natixis. Natixis forecasts that foreign currency outflows still remain larger (78%) and the share of RMB hovers at 22% for whole of Q3 2017.

However, foreign reserves have largely remained stable due to two factors, according to Natixis.

“Euro has remained strong and the dollar index has continued to fall, contributing to a positive valuation effect. In addition, it can be explained by the relatively large role of RMB-denominated outflows (22%) as well as unrecorded capital outflows (mainly cash).”


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