China updates: flows, currency and concerns - UOB

Analysts at UOB were monitoring wirse over China.

Key Quotes:

"In an interview with Bloomberg, PBoC advisor Fan Gang said that the decline in China’s foreign reserves is positive in the long-run and the RMB is at a “turning point” after having been overvalued against USD over past 3-4 years. Nonetheless, the government does not want sharp changes in the country’s foreign reserves.

Although China will not totally drop capital control measures, it is unlikely they will step them up. Outflow curbs have been effective, and the market has responded. China’s banking problems are still manageable.

Former adviser to the PBoC Yu Yongding said that China cannot let its currency depreciate more than 25% against USD in 2017. He said that China will continue to face pressures from capital outflows and currency depreciation this year but the extent of depreciation is not limitless and it can be completely controlled.

Former IMF Deputy Managing Director Zhu Min said that the latest China FX reserves data reflected market and capital flows. China’s real concern is in the Financial sector which should deleverage."