China Faces a Growing Crisis of Foreign Investor Confidence

Headwinds are becoming increasingly evident in China’s years-long campaign to lure foreign money to its gargantuan financial markets, spurred by divergent trends in monetary policy and potentially more fundamental geopolitical shifts.

In the past decade, Beijing has been steadily opening up to overseas capital, seeking a counterbalance to outbound pressures—the Chinese households and companies that want to deploy cash abroad. Regulators began with foreign central banks, and then steadily widened the universe of investors allowed in. The latest reform came just last month.