According to data from the Institute of International Finance (IIF), China has seen unprecedented capital outflows. (Image source: Adobe stock)
[See China March 26, 2022 News](See a comprehensive report by Chinese reporter Li Zhengxin)RussiaattackUkraineAfterwards, the Beijing authorities made it clear that they opposed the European and Americansanctionmeasures, and continue to maintain relations with Russiatradingrelation. This worries international capital.International Finance Institute(IIF) data show an unprecedented capital outflow from China.
IIF: Unprecedented capital outflows from China
Russia has been sanctioned by European and American countries in turn for attacking Ukraine, which has suffered heavy economic and financial losses. The long-term impact is difficult to estimate. The statement of the Beijing authorities may be subject to secondary sanctions from European and American countries, triggering a wave of foreign capital withdrawal.
Analysts at the Institute of International Finance (IIF) said after compiling daily data that from late February, global capital flows took a “very unusual” shift in emerging market countries, as investors pulled out of China and others. The market remains unchanged.
The Institute of International Finance is the most influential global financial industry association, an association or trade organization for the global financial services industry. IIF members include commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks.
“The scale and intensity of capital outflows we are seeing from China is unprecedented, especially as we are not seeing other emerging There are similar outflows from the market.”
“The outflows that followed Russia’s attack on Ukraine suggest that foreign investors may be looking at China in a new light,” the report said.
Economists say that under U.S. and European Union sanctions, and foreign companies following corresponding measures, the outside world could see more than a decade of Russian economic gains evaporate.
Russia’s economy will shrink by about 15% in 2022 due to multiple sanctions imposed on Russia’s aggression against Ukraine, a recession that could be twice as deep as it was during the global financial crisis, according to previous IIF analysis.
While the IIF does not expect capital outflows to spread widely across emerging markets, the spillover effects of the war are worrying market watchers in China.
Foreign investors sold a net $5.5 billion of Chinese government bonds last month, the largest monthly outflow on record, official data showed, according to Bloomberg. Market watchers have speculated that Moscow may sell its Chinese holdings to raise funds, given that the Russian central bank’s foreign currency reserves held in foreign currencies such as euros and dollars have been frozen.
Some worry that Beijing’s pro-Russian stance could trigger secondary Western sanctions after Russia.
This concern is also reflected in the securities market. On March 11, the US Securities Regulatory Commission designated five Chinese companies listed in the US, requiring timely submission of detailed audit documents to the regulator, otherwise they would be expelled from US exchanges. The news sparked a sell-off in shares of Chinese companies in the U.S. and Hong Kong.
Separately, a new nationwide resurgence of the COVID-19 outbreak in China and a “regulatory” crackdown by Beijing has also caused panic among investors.
Beijing’s pro-Russian attitude has serious consequences
Instead of using its influence in Russia to mediate a ceasefire in Ukraine, Beijing has refused to condemn Russia for waging war or join the sanctions camp, while also making it clear that it will continue to establish normal trade relations with Russia and actively promote acceptance at home Pro-Russian rhetoric, and also claims to be a “neutral” role.
“There must be no economic or military support for a Russian invasion,” NATO Secretary-General Jens Stoltenberg said at a March 24 news conference, a day after he accused Beijing of spreading “blatant lies and error message”.
On the same day, the White House warned Beijing not to use the business opportunities created by sanctions to provide “blood transfusions” to the Russian economy. Because the Chinese ambassador to Russia urged Chinese businessmen in Russia not to waste time and “fill the gap in the Russian economy”.
Last week, U.S. President Joe Biden warned Chinese leader Xi Jinping of “consequences” if Beijing provided Russia with war supplies.
CNN Business of the United States has previously analyzed that although Russia relies on China to a certain extent in trade, Russia is not China’s primary partner in foreign trade. In addition, Chinese companies and financial institutions are also worried that if they deal with Russian companies, they will be indirectly affected by sanctions.
Craig Singleton, a scholar at the Foundation for Defense of Democracies, a U.S. think tank, said Chinese companies and financial institutions “are very likely to be found to have assisted Russia in any meaningful way to evade U.S.-led sanctions. Soon they will find themselves under increasing scrutiny from the West.”
“Most Chinese financial institutions and companies cannot afford not being able to use the U.S. dollar and U.S. technology,” said Neil Thomas, an analyst at political risk consultancy Eurasia Group. “There is no indication yet. , Beijing deems it worthwhile to violate Western sanctions in order to aid Russia.”
He added that Beijing would also face “heavy economic penalties” for blatant violations of sanctions imposed by Western countries.
Responsible editor: Xin He Source: look at China
Short URL for this article:
All rights reserved, any form of reproduction is subject to the authorization of China. It is strictly forbidden to create mirror websites.
[Honorary Member Wanted]Streams can merge into the sea, and small kindness can achieve great love. We sincerely solicit 10,000 honorary members from Chinese people all over the world: each honorary member only needs to pay a subscription fee every year to become an honorary member of the “Watch China” website. Provide independent and true key information, warn them in times of crisis, and save them from the great plague and other social crises.
