PRC Capital Outflows for Securities Investments
October 14th, 2006China’s foreign exchange control authority reports that US$44.8 billion flowed out of China to purchase securities on foreign markets in the first half of 2006, according to this Xinhua story in the People’s Daily online English edition.
Of course, these legal flows are all subject to SAFE’s approval.
China now has 13 billionaires (according to one recent rich list), but none of them could directly open a brokerage account in the US and buy say a few million shares in Google just because he or she (and the #1 is a she) likes the YouTube acquisition.
Rather, the outflows are from institutional investors (who may be acting on behalf of individuals, or might be insurance companies looking for investments).
China has approved large FOREX quotas for those institutions that have obtained QDII status since that scheme was finally launched in July. However, the Chinese government’s purchase of US treasury bonds remains the PRC’s largest capital account outflow.
Note that some of the outbound flows could be for investment in PRC companies listed on foreign stock markets (such as the Bank of China, which is listed in Hong Kong but has not yet issued A-shares).
SAFE’s report is available here in PDF format in Chinese (it runs 40 pages).
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