China: Capital outflows picked up seasonally – Standard Chartered

Based on their Non-FDI (Foreign Direct Investment) tracker, analysts at Standard Chartered recently said that capital outflow from China followed the historical pattern of picking up on a seasonal basis.

Key quotes

Our tracker suggests that China registered non-FDI capital outflows of USD 27.1bn in December, slightly higher than USD 24.7bn in November, following the historical pattern, despite a stronger currency.

Non-FDI capital outflows rose to USD 192bn in 2019, compared with outflows of USD 108bn in 2018, against a backdrop of external uncertainty and currency depreciation.

Exports soared 7.6% y/y in December partly on seasonal and base effects. The early occurrence of Lunar New Year in 2020 may have led to the front-loading of trade activity. The announcement of phase-one deal also likely boosted market sentiment.

 The trade surplus expanded to USD 46.8bn from USD 37.6bn in November, and the services trade deficit widened to c.USD 22bn, according to our estimates.

Banks registered their first monthly net FX settlement (i.e., net buying of FX from clients) since May 2019, as per State Administration of Foreign Exchange (SAFE) data.

While the incentive to hold FX increased, demand for purchasing FX eased in December.