China: Tale of tumbling reserves - BBH

Research Team at BBH, notes that the dollar value of China's reserves fell by a little more than $69 bln in November and was the fifth consecutive monthly fall. 

Key Quotes

“China's reserves finished last year near $3.33 bln.  As of the end of last month, they stood at $3.051 bln.  Part of the decline in reserves, of course, reflects valuation swings. The reserves are kept primarily in fixed income, and November saw a sharp sell-off in global bonds.  Also, the dollar appreciated sharply, which reduces the dollar value of the component of reserves invested in euro (-3.6% in November) and yen (-8.4% in November).”

“To be sure, there were genuine capital outflows as well.  On the one hand, China appears to be introducing new capital controls to limit outflows.  Foreign companies repatriating profits and proceeds of asset sales are being stymied, according to the front-page story in today's Financial Times.  On the other hand, many expect renewed capital outflows next year when the $50k cap on individual capital exports is renewed.”