Tuesday, January 03, 2017

How capital flight and US treasuries are linked - Paul Gillis

Paul Gillis
China sees a massive capital flight, putting its currency, the yuan, under pressure. For that reasons, says accounting professor Paul Gillis to the VOA, are capital flight and China´s garage sale of US treasuries closely linked.

The VOA:
An important reason for the slide in yuan is continuous capital flight from China. High-end Chinese savers have demonstrated a strong tendency to sneak money out of the country despite strong official measures to prohibit it. But if these savers lose confidence in the yuan, analysts say they most likely would suddenly try to get their money out of China, which could make the financial crisis a self-fulfilling prophecy. 
"China has experienced significant capital flight. What that means is the Chinese are converting their RMB savings into dollars and investing abroad," said Paul Gillis, a professor at Peking University's Guanghua School of Management. "When Chinese convert RMB into dollars, China uses its U.S. dollar holdings to buy the yuan. If it did not do so, there would quickly be an imbalance between buyers and sellers of the yuan, and the value of the yuan would plummet."
More in the VOA.

Paul Gillis is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more financial experts at the China Speakers Bureau? Do check out this list.  
Post a Comment