{"id":127077,"date":"2011-11-21T08:47:24","date_gmt":"2011-11-21T15:47:24","guid":{"rendered":"http:\/\/chinadigitaltimes.net\/?p=127077"},"modified":"2011-11-21T08:47:24","modified_gmt":"2011-11-21T15:47:24","slug":"capital-flows-signal-bearish-sentiment-on-china","status":"publish","type":"post","link":"https:\/\/chinadigitaltimes.net\/2011\/11\/capital-flows-signal-bearish-sentiment-on-china\/","title":{"rendered":"Capital Flows Signal Bearish Sentiment on China"},"content":{"rendered":"<p>An influx of speculative capital, known as &#8220;hot money,&#8221; has for the last several years allowed China&#8217;s foreign exchange reserves to continue growing despite a <a href=\"http:\/\/www.businessweek.com\/news\/2011-11-21\/china-trade-surplus-may-be-gone-in-two-years-adviser-says.html\">shrinking trade surplus<\/a>.\u00a0The Wall Street Journal&#8217;s Tom Orlik, however, highlights recently released data on cross-border capital flows which shows that\u00a0<strong><a href=\"http:\/\/blogs.wsj.com\/chinarealtime\/2011\/11\/21\/hot-money%E2%80%99s-hurried-exit-from-china\/\">China\u2019s banks were rare net sellers of foreign currency in October<\/a><\/strong>, and explains why the data may indicate a souring outlook on China&#8217;s economy:<\/p>\n<blockquote><p>Indeed, the numbers normally suggest that in addition to the trade surplus, banks are buying up speculative capital flowing into the economy. Tuesday\u2019s numbers suggest that now speculative capital might be exiting China. That makes sense given\u00a0diminished expectations of yuan appreciation,\u00a0falling property prices\u00a0and a deepening crisis in Europe pushing investors away from risky positions.<\/p>\n<p>A comparison with past occasions when hot money has flowed out of China provides little reassurance. Netting out the trade surplus from banks\u2019 FX purchases gives a rough approximation of the scale and direction of capital flows. The last time it turned negative was May 2010, when fears of a double dip downturn were on the rise. The time before: the eve of the financial crisis in August 2008.<\/p><\/blockquote>\n<p>See also <a href=\"http:\/\/chinadigitaltimes.net\/2011\/11\/cdt-money-indicators-slowdown\/\">CDT Money&#8217;s coverage of the Chinese economy<\/a>\u00a0and increasing signs of a slowdown, including <a href=\"http:\/\/chinadigitaltimes.net\/2011\/11\/real-estate-prices-tumble-as-chinese-government-tries-to-contain-a-bubble\/\">tumbling Chinese real estate prices<\/a>\u00a0and <a href=\"http:\/\/chinadigitaltimes.net\/2011\/11\/china%E2%80%99s-hu-pledges-more-imports-to-boost-world-growth\/\">Hu Jintao&#8217;s recent pledge to boost imports<\/a>\u00a0to offset weakening demand for Chinese exports.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>An influx of speculative capital, known as &#8220;hot money,&#8221; has for the last several years allowed China&#8217;s foreign exchange reserves to continue growing despite a shrinking trade surplus.\u00a0The Wall Street Journal&#8217;s Tom Orlik, however, highlights recently released data on cross-border capital flows which shows that\u00a0China\u2019s banks were rare net sellers of foreign currency in October, [&hellip;]<\/p>\n","protected":false},"author":983,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[116,2],"tags":[7800,14843,2666,738,14775,2681],"class_list":["post-127077","post","type-post","status-publish","format-standard","hentry","category-world","category-economy","tag-economic-slowdown","tag-foreign-direct-investment","tag-foreign-exchange","tag-foreign-trade","tag-hard-landing","tag-trade-surplus","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.9 (Yoast SEO v23.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Capital Flows Signal Bearish Sentiment on China<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/chinadigitaltimes.net\/2011\/11\/capital-flows-signal-bearish-sentiment-on-china\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Capital Flows Signal Bearish Sentiment on China\" \/>\n<meta property=\"og:description\" content=\"An influx of speculative capital, known as &#8220;hot money,&#8221; has for the last several years allowed China&#8217;s foreign exchange reserves to continue growing despite a shrinking trade surplus.\u00a0The Wall Street Journal&#8217;s Tom Orlik, however, highlights recently released data on cross-border capital flows which shows that\u00a0China\u2019s banks were rare net sellers of foreign currency in October, [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"http:\/\/chinadigitaltimes.net\/2011\/11\/capital-flows-signal-bearish-sentiment-on-china\/\" \/>\n<meta property=\"og:site_name\" content=\"China Digital Times (CDT)\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ChinaDigitalTimes\" \/>\n<meta property=\"article:published_time\" content=\"2011-11-21T15:47:24+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/chinadigitaltimes.net\/wp-content\/uploads\/2021\/08\/CDT-logo.png\" \/>\n\t<meta property=\"og:image:width\" content=\"186\" \/>\n\t<meta property=\"og:image:height\" content=\"177\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Scott Greene\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cdt\" \/>\n<meta name=\"twitter:site\" content=\"@cdt\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Scott Greene\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"http:\/\/chinadigitaltimes.net\/2011\/11\/capital-flows-signal-bearish-sentiment-on-china\/#article\",\"isPartOf\":{\"@id\":\"http:\/\/chinadigitaltimes.net\/2011\/11\/capital-flows-signal-bearish-sentiment-on-china\/\"},\"author\":{\"name\":\"Scott Greene\",\"@id\":\"https:\/\/chinadigitaltimes.net\/#\/schema\/person\/3393334e12ee6be1f84abbe56c37b108\"},\"headline\":\"Capital Flows Signal Bearish Sentiment on China\",\"datePublished\":\"2011-11-21T15:47:24+00:00\",\"dateModified\":\"2011-11-21T15:47:24+00:00\",\"mainEntityOfPage\":{\"@id\":\"http:\/\/chinadigitaltimes.net\/2011\/11\/capital-flows-signal-bearish-sentiment-on-china\/\"},\"wordCount\":239,\"publisher\":{\"@id\":\"https:\/\/chinadigitaltimes.net\/#organization\"},\"keywords\":[\"economic slowdown\",\"foreign direct investment\",\"foreign exchange\",\"foreign trade\",\"hard landing\",\"trade surplus\"],\"articleSection\":[\"China &amp; 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