Taps Coogan – October 1st, 2023
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The latest chapter in the story of China’s increasing economic woes comes from Robin Brooks, Chief Economist at IIF, and highlights how China’s uninterrupted 20+ year streak of net foreign capital inflows has ended.
In the past 20 years, it has never happened that the rest of EM got capital inflows when China had outflows. But that is what's happening now. In the year to Q2 2023, foreigners pulled money out of China (red), while they put money into the rest of EM. Decoupling is happening… pic.twitter.com/1YGDnhRnVs— Robin Brooks (@RobinBrooksIIF) September 29, 2023
As Mr. Brooks notes, whereas the rest of emerging markets have seen flows turn positive again, China is still seen negative flow. Even if flows do turn positive in a few quarters, as will presumably happen, there is little chance of them returning the staggering levels of old.