Over $150 billion in capital could flee China in 2023, according to an estimate by Natixis, due to pent-up demand caused by the pandemic.
Prior to the pandemic, China saw around $150 billion in annual capital flight from people going overseas, according to a «Bloomberg» report citing Natixis APAC chief economist Alicia Garcia Herrero.
And in 2023, the figure is likely to be even higher as Chinese residents were unable to travel for the last three years due to Covid-related restrictions.
«China will confront big outflows this year and this will likely pressure the renminbi and the current account,» Garcia Herrero said, adding that her estimate is based on unexplained differentials in global tourism data.
Capital Controls
Currently, China has strict capital controls that limit citizens to converting just $50,000 worth of yuan per year.
In the event that many can’t pull money out of the country and capital flight underperforms previous years, Garcia Herrero notes that China could still see impact to its labor force, productivity and growth.
