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China swift payments in CNY declined to 1.85% (peaked at 2.8% in August 2015, when China had to let the FX 📉as the ECB & BOJ took their FX on sale, causing the CNY to be too expensive as it tracked the USD);
📉internationalization of the CNY is a price of 📈capital controls👌🏻
📉internationalization of the CNY is a price of 📈capital controls👌🏻
Q: Why does it need capital controls?
A: To control capital flows, containing CNY liquidity (onshore), which is massive. Has the largest foreign FX reserves, but only 11% of M2.
According to the Chin Ito Index, China &India have the most restrictive capital controls in Asia🇮🇳🇨🇳
A: To control capital flows, containing CNY liquidity (onshore), which is massive. Has the largest foreign FX reserves, but only 11% of M2.
According to the Chin Ito Index, China &India have the most restrictive capital controls in Asia🇮🇳🇨🇳
W/ the great wall of capital controls erected, the gov' will eye the current account (0.3% of GDP in 2018 so surplus narrowing);
China has a trade surplus but deficit on services is large (tourism good buying arbitrage, education, etc).
VAT reduction'll keep spending onshore.
China has a trade surplus but deficit on services is large (tourism good buying arbitrage, education, etc).
VAT reduction'll keep spending onshore.
That has implications for countries that have been benefiting from mainland tourists buying arbitrage (Korea, Tokyo, etc). Department store numbers from Korea is likely to reflect some of the trend moving forward:
The line of defense for capital is moving to the current account.
The line of defense for capital is moving to the current account.
