The New York Times:
For years, China soaked up much of the world’s investment money, as the economy grew at annual rates in the double digits. A largely closed financial system kept China’s own money corralled inside the country.
Now, with growth slowing, money is gushing out of the country. And the government has a looser grip on the spigot, because China dismantled some currency restrictions to open up its economy in recent years.
“Companies don’t want renminbi and individuals don’t want renminbi,” said Shaun Rein, the founder of the China Market Research Group. “The renminbi was a sure bet for a long time, but now that it’s not, a lot of people want to get out.”
Managing the situation has proved complicated for the government...
Unofficial methods abound (to export capital out of the country).
Companies have inflated trade invoices to keep more profits outside the country, although Chinese authorities have cracked down on the practice.
More in the New York Times.Mr. Rein described doing market research with a wealthy woman in Shanghai who changed $7 million this winter from renminbi into dollars, by using 140 relatives, friends and even friends’ relatives who each carried $50,000 a piece.
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