I highly recommend the FT article on China's 1% in the links below. They bring up the capital flight problem that a Chinese hard landing might mean. I noted last April that Victor Shih gave a talk at INET on the Fragile State of China’s FX Reserves. His thesis was that capital flight would be an issue in the event of a hard landing. What's more is that Marshall Auerback noted that "If you had huge capital flight as Shih suggests, the implication is that the yuan gets much weaker, as presumably these yuan are exchanged for other assets or currencies." We are seeing that. I also mentioned the commodities speculative trade unwinding. We are seeing that too.
As I said last year, just because we are thinking about this doesn’t mean we have it all figured out. There are still a lot ...
As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.