According to Reuters, citing data from the Institute of International Finance (IIF), China’s debt market portfolios lost $7.7 billion in August in seven consecutive months of outflows. The figure signals a worrying message for the world’s second-largest economy.

IIF economist Jonathan Fortun said, “For the coming months, several factors will influence flows dynamics, among these the timing of inflation peaking and the outlook for the Chinese economy will be in focus.”

“Equity and debt portfolio flows in China have suffered considerably throughout 2022.”

In addition, China’s yuan weakens against the U.S. dollar is also a reason for outflow capital. Since mid-August, the yuan reportedly has lost 3.2% against the dollar, marking the worst yearly performance in over decades.

SCMP cited data from the Institute of International Finance reporting that China saw capital outflows of $81 billion from February to July this year.

In contrast with China’s market, as reported by Reuters, emerging markets outside the country posted portfolio inflows of $20.3 billion in equities and $13.5 billion in debts.

Latest data also shows the country’s trade has lost momentum when exports posted a modest increase of 7.1% in August, significantly down from an 18 % rise in July. 

China’s economy has been in trouble when it’s facing a property crisis and weak consumption as lockdowns are being carried out as Covid measures across the country. 

Experts warn that its controversial zero-Covid policy has been doing harm to domestic demand, business activities from both local and foreign-invested firms, and trade, among others. 

The most recent megacity has been under lockdown is Chengdu, affecting over 21 million residents.

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