Article (link below) on potential capital outflows out of China ahead, highlighting China being reluctant to implement capital controls and lose some of the gains of market opening:

  • with stronger capital constraints now less likely, something else will have to budge
  • “China can use the exchange rate to deal with the external pressure,” said Larry Hu, China economist at Macquarie Group Ltd. “If the dollar strengthens, the yuan can weaken to absorb the shock.”
  • Depreciation would be risky, putting more pressure on already credit-strained Chinese companies with dollar-denominated debt and also running the risk of a self-reinforcing cycle of capital outflows

Info comes via a Bloomberg piece (may be gated)

Yuan (CNH shown in chart) does have room to depreciated, its strengthened since mid-2020.

Article (link below) on potential capital outflows out of China ahead, highlighting China being reluctant to implement capital controls and lose some of the gains of market opening: