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Goldman Warns China’s Outflows May Be Worse Than They Look

  • Yuan cross-border payments surged to $27.7 billion in August
  • Market factors can’t explain such large moves, Goldman says
Bloomberg business news

Goldman Sachs Warns on China's Outflows

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China’s currency outflows may be bigger than they look, with Goldman Sachs Group Inc. warning that a rising amount of capital is exiting the country in yuan rather than in dollars.

While the nation’s foreign-exchange reserves have stabilized and lenders’ net foreign-exchange purchases for clients have fallen close to a one-year low, official data show that $27.7 billion in yuan payments left China in August. That’s compared with a monthly average of $4.4 billion in the five years through 2014. Such large cross-border moves can’t be explained by market-driven factors and need to be taken into account when measuring currency outflows, according to MK Tang, Hong Kong-based senior China economist at Goldman Sachs.