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Brief Thoughts on Chinese Capital Flows Ahead of the Year of the Monkey
Chinese markets will be closed next week for the Lunar New Year celebration. However, over the weekend, China will report its January reserve figures. The market suspects that the PBOC burnt through another $120 bln of reserves. China's reserves stood at $3.81 trillion in January 2015. There are expected to stand near $3.21 trillion as of the end of last month. This draw down, coupled with its trade surplus and the pressure on the currency has led many to express concerns about capital outflows from China. While we recognize there have been outflows, we suspect the market is exaggerating the outflows and ... (full story)