According to Standard Chartered Bank’s tracker, China posted non-FDI capital outflows of USD 25bn in November, compared to USD 25.3bn in October – marking a third straight month of outflows of over USD 20bn.
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“The market remained cautious in November as a US-China trade deal was yet to be confirmed. The Chinese yuan (CNY) strengthened against the USD at the start of November (reaching 6.98) and weakened towards month-end (returning to the end-October level of 7.03).”
“FX assets held by the People’s Bank of China (PBoC) inched down by USD 0.2bn, continuing to suggest overall balanced cross-border flows. Goods exports weakened unexpectedly in November, reflecting sluggish external demand and the continued impact of tariffs. Meanwhile, imports saw marginal growth after six straight months of declines.”
“The merchandise trade surplus narrowed to USD 38.8bn, while we estimate that the services trade deficit picked up to USD 19bn. Monthly net FDI inflows rose to USD 5.3bn, the highest since May. We calculate total net capital outflows (including non-FDI flows) at USD 19.7bn in November, down from USD 24.7bn in October.”
“Banks’ net FX sales to clients showed a slight pick-up, while posting modest net FX receipts for a second straight month, as per State Administration of Foreign Exchange (SAFE) data. SAFE data also showed that corporates and individuals were more willing to convert FX receipts into CNY in November.”
“We expect the US-China phase one trade deal, which was announced on 13 December, to help anchor market expectations and ease outflow pressure in the coming months.”
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