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China’s capital is dropping significantly

China’s capital is dropping significantly

According to reports from Bloomberg money has been flowing out of China since 2014. China is loosing a lot of its internal value due to a financial climate shift which could see the Yuan under extreme pressure in the next couple of months. So far what we know is that the Yuan is getting weaker and weaker at an alarming rate. Since this has been happening the Chinese economy as a whole has been expanding at the slowest rate for more than a quarter of a century. While we see the US and the dollar increase, investors and domestic households are jumping ship to put the money behind other currencies. The lack of confidence behind China’s economy is causing a scare that is leading to further outflows.

 

Over 1.2 trillion has gone out of the country since the devaluation of the Yuan in August 2015. The Chinese foreign exchange reserves have also fallen by $800 billion in the last two years. Since the major devaluation of the Yuan, China has increased repayment of foreign currency debt to subsidise as much of the lose. China is now acquiring foreign currencies like never before.

 

According to several reports Chinese citizens have been investing in insurance in Hong Kong and buying property overseas. They are also buying bitcoins to get out of a declining financial investment and into a globally soft currency before re-investing in other foreign exchange. In response, the government has implemented various counter measures to slow down the process and put a band-aid on the bleeding.  


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