China’s Capital Flight Concerns: Arthur Hayes Discusses Possible Implications on the Global Macro Environment and Bitcoin

According to BitMEX founder and crypto expert Arthur Hayes, the noticeable trend of potential capital flight from China demands close attention. 

Google Finance data has shown that the Chinese yuan (CNY) depreciated by over 5% against the US dollar since the beginning of 2023. Hayes, who shared his insights with his 394,100 followers on the X social media platform, discussed a conversation with China analyst Andrew Collier, Managing Director of Orient Capital Research. Collier suggested tracking this trend by measuring the gap between China’s net export earnings (earnings from exports minus import expenses) and the country’s foreign exchange reserves (foreign currency reserves held by China’s central bank). Bloomberg data indicates an increase of approximately $32 billion in China’s foreign exchange reserves since the year’s start, while Trading Economics data shows a year-to-date trading surplus for China of around $553 billion. 

Hayes speculates that roughly $520 billion has left China, presenting several possibilities, including increased gold purchases, the repayment of offshore USD debt by Chinese banks and corporations, or the emigration of wealthy individuals. Notably, China appears to be refraining from acquiring more US Treasuries. Hayes emphasizes that as long as the Japanese yen (JPY) remains weak, the CNY must also depreciate to maintain Chinese export competitiveness against Japan. Regardless of its destination, Chinese capital appears to be on the move in significant amounts, with Hayes expressing hope that some may find its way into Bitcoin through Satoshi.

Clever Robot News Desk 23rd September 2023

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