Investors pull record $15bn out of China economy

Investors pulled a record amount of cash out of China in the second quarter of this year amid concerns about the health of the world’s second-largest economy, official data showed.
 
In the three months to June, outflows of investor capital from China reached $15 billion, according to balance of payments figures published by the State Administration of Foreign Exchange last week.
Balance of payment data can be used to measure flows of capital into and out of an economy’s financial markets and company profits. China’s direct investment liabilities, a proxy for the amount of capital that traders have invested in a country, decreased for only the second time on record over the past three months. In the first six months of this year, liabilities fell by $5 billion.
 
Chinese companies are also stepping up outbound investment at a record pace, spending $71 billion overseas in the second quarter, an increase of more than 80 per cent from $39 billion in the same period last year. The rise in outbound investment could be a reflection of Chinese firms seeking less risky investments elsewhere as the domestic economy remains sluggish.
The State Administration of Foreign Exchange data underscored the challenges facing Chinese policymakers in trying to revive sentiment towards the economy. A deep-seated property crisis and a slower-than expected recovery from the pandemic have prompted investors to turn elsewhere.