China is ramping up efforts to halt a flood of money leaving the country in response to an economic slowdown, moves that risk undermining Beijing’s ambition to elevate the yuan’s profile on the world stage.
Its latest steps involve curbing the ability of foreign companies in China to repatriate earnings, shrinking the pool of Chinese yuan available for banks in Hong Kong to make loans, and banning yuan-based funds for overseas investments, people with direct knowledge of the matter said.
The measures, most of which haven’t been publicly disclosed, follow efforts by China’s central bank to discourage investors from betting against the yuan and to crack down on overseas money transfers.
‘They’re sparing no effort to prevent capital outflows,’ said a senior Chinese banking executive close to the central bank. ‘All the measures are the most aggressive I’ve seen in recent history.’
This post was published at David Stockmans Contra Corner on January 28, 2016.
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