China’s Strictest Capital Controls Yet Cannot Stop Outflows: Morgan Stanley

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Bala Murali Krishna
Published on
Updated on
China Capital Controls

In a bid to curb outflows and better manage its currency, China plans to impose its strictest capital controls yet since it began regulating in September 2015. Among other things, it proposes to scrutinize foreign acquisitions worth $10 billion or more, or just $1 billion if the target company is in an unrelated business; and raise monitoring of capital outflows including those via the Shanghai free trade zone. The regulations – still far from watertight – will in the near term reduce capital outflows and curb volatility of the renminbi, but also raise doubts about China’s determination to fully back…

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