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1/6
There is so much upward pressure on the RMB that I suspect that regulators will do whatever they can next year to encourage outflows. The problem is that the more regulators do to accommodate capital flows in both directions, the less they can... https://www.bloomberg.com/news/articles/2020-12-12/relentless-china-inflows-spur-call-for-strongest-yuan-since-1993
There is so much upward pressure on the RMB that I suspect that regulators will do whatever they can next year to encourage outflows. The problem is that the more regulators do to accommodate capital flows in both directions, the less they can... https://www.bloomberg.com/news/articles/2020-12-12/relentless-china-inflows-spur-call-for-strongest-yuan-since-1993
2/6
control domestic liabilities. This makes it harder to prevent systemic instability. Total foreign inflows are still low enough that they don't matter too much overall to financial stability, but another 1-2 years of similar inflows and conditions will be very different.
control domestic liabilities. This makes it harder to prevent systemic instability. Total foreign inflows are still low enough that they don't matter too much overall to financial stability, but another 1-2 years of similar inflows and conditions will be very different.
3/6
Beijing is in a tough position. A stronger currency reinforces internal circulation and reduces upward pressure on the debt in the long term, but it does so by undermining external circulation and increasing upward pressure on the debt in the short term. This is because...
Beijing is in a tough position. A stronger currency reinforces internal circulation and reduces upward pressure on the debt in the long term, but it does so by undermining external circulation and increasing upward pressure on the debt in the short term. This is because...
4/6
the greater the trade surplus, the less pressure there is to reduce savings (by raising household debt) or to increase investment (by raising public sector debt). The trade surplus helps mediate the rise in debt, and a smaller surplus in the short term means more debt.
the greater the trade surplus, the less pressure there is to reduce savings (by raising household debt) or to increase investment (by raising public sector debt). The trade surplus helps mediate the rise in debt, and a smaller surplus in the short term means more debt.
5/6
In the past few years Beijing has always reacted to its imbalances by choosing short-term benefits over the longer-term outlook, but with so much recent currency appreciation, the pressure to get it right is greater than ever. It will be very damaging to credibility for...
In the past few years Beijing has always reacted to its imbalances by choosing short-term benefits over the longer-term outlook, but with so much recent currency appreciation, the pressure to get it right is greater than ever. It will be very damaging to credibility for...
6/6
Beijing to reverse recent policies to liberalize inflows, so for now I think they have little choice but to balance upward pressure on the RMB by liberalizing outflows.
Beijing to reverse recent policies to liberalize inflows, so for now I think they have little choice but to balance upward pressure on the RMB by liberalizing outflows.
