A new Deutsche Bank study estimates that nearly $328 billion in capital was illegally moved out of China in the past six months. This news has come at a bad time as a lot of capital is already expected to leave the country as the Chinese government is moving to weaken their currency. Even though China has strict capital controls, a number of organizations were about to dodge the government's strict regulations. 2015 Chinese banking statistics claim that there were $2.2 trillion in imported goods, yet Chinese customs could only account for $1.7 trillion of those imports. New measures to stimulate economic growth in the Chinese economy will not be effective until they can more closely monitor their import and exports markets.
http://www.marketwatch.com/story/billions-in-capital-moved-out-of-china-right-under-the-governments-nose-2016-03-01
These unaccounted imports as well as illegal exported capital is ridiculous. It is hard to believe that China cannot declare where these billions and trillions of dollars in imports and capital went. To me, this is very unusual and some investigation needs to be done in order to help locate this unaccounted money. I'm looking forward to seeing how this report develops in the upcoming months.
ReplyDeleteChina is famous for having a drastically low A, if they cannot fix the regulators in their country they will never be the super power they seek to become. Corruption is a common problem, it will be interesting to see the approach they take to solving it. Do you think it will be more legalist, or something else?
ReplyDeleteThis is very interesting and I'm curious as to how the Chinese Gov./Customs messed this up. China is trying to get to the point of economic growth and something like this situation is not what they need. China needs to solve this issue in order to move on with their economic growth strategy. Seems like a case of corruption to me. I'm just trying to understand how, even with "strict capital controls", would Chinese Customs lose count of about half a trillion dollars in imported capital goods?
ReplyDeleteFor China, capital moving out is a sign of the decrease in foreign investment. As what we mentioned in class, the decreasing investment gonna decrease the interest rate, decreasing the national saving and finally influence the country output. To decrease the influence, China government tried to decrease the exchange rate to attract more foreign investment. Weaken currency does cause problems to Chinese international students.
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