What is behind China’s capital outflows?

Capital flows to and from China have reversed. On balance, considerable amounts have flowed into China for years up to around mid-2014, mainly in the form of direct investments. Since then, however, significant funds have left the country. One reason is that the Chinese themselves are now making increasing foreign direct investments. Another reason lies in what are referred to as “other investment”: Chinese are lending more to foreign borrowers, transferring money to foreign accounts and reducing external debt. The reversal of capital flows can definitely be explained in part by the fact that investment incentives in China are declining. On the other hand, it is also normal for a maturing economy such as China to look for investment objects in a globalised world and thus evolve into a net “funder”.

What is behind China’s capital outflows?(PDF, 41 KB, non-accessible)