BIS gives alternative view on China's outflows

London

PERSISTENT capital outflows from China since mid-2014 were probably driven more by local companies paying down their dollar-denominated debt - in anticipation of a stronger US currency - than investors ditching assets, according to the Bank for International Settlements.

The outpouring of China's currency "led to two different narratives", researchers for the Switzerland-based institution said in a report on Sunday. "One tells a story of investors selling mainland assets en masse, the other of Chinese firms paying down their dollar debt. Our analysis favours the second view, but also points to what both narratives miss - the shrinkage of offshore renminbi deposits."