SHANGHAI— Wealthy Chinese have taken hundreds of billions of dollars out of the country this yeartaking advantage of the end of covid precautions that had almost completely sealed China's borders for almost three years.
They are using their savings to buy apartments, stocks and insurance policies abroad. Now that they can fly again to Tokyo, London and New York, Chinese travelers have bought apartments in Japan and poured money into accounts in the United States or Europe that pay higher interest rates.
The movement of money outward partly indicates unease within China about the faltering post-pandemic recovery, as well as deeper problems such as a slowdown in real estate, the main repository of wealth for families. For some, it is also a reaction to fears about the economy under China's leader Xi Jinping, who has strengthened government control over many aspects of society.
The Chinese are improvising to circumvent strict government controls. They have bought small gold bars to scatter in carry-on luggage, as well as stacks of foreign coins. In total, an estimated $50 billion a month has been taken out of China this year.
In recent decades, large-scale money leaks have sparked economic crises in Latin America, Southeast Asia, and even China itself in late 2015 and early 2016. So far, the Chinese government indicates that it has the situation under control. .
The money leaving China has weakened the currency, the renminbi, against the dollar and other currencies. And that has helped sustain China's exports, which fund tens of millions of Chinese jobs.
To the dismay of other countries, particularly in Europe, China is exporting a growing number of solar panels, electric cars and other advanced products, while replacing imports with domestic production.
The renminbi fell in value this year to its lowest level in 16 years, hovering around 7.2 renminbi per dollar recently. The surge in money outflow from China that occurred eight years ago was caused by a stock market crisis and a failed attempt to devalue the currency. China's central bank had to spend up to $100 billion a month from its foreign money reserves to prop up the renminbi.
In contrast, China appears to have spent about $15 billion a month since mid-summer to stabilize its currency, according to central bank data.
“The scale of the pressure is still smaller than in 2015 or 2016,” said Brad Setser, an international finance specialist at the Council on Foreign Relations.
KEITH BRADSHER AND JOY DONG. THE NEW YORK TIMES
BBC-NEWS-SRC: http://www.nytsyn.com/subscribed/stories/7034979, IMPORTING DATE: 2023-12-18 19:30:07
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