Billions of dollars are pouring out of Chinese markets in a “seismic” change in capital inflows despite a wave of confidence-boosting measures

Chinese stocks rebounded on Monday morning after Beijing unveiled a raft of measures aimed at halting its nearly month-long decline. But the rally proved short-lived, as foreign investors used it as an opportunity to offload $1.1 billion in mainland Chinese shares, according to Reuters. bloomberg data.

China’s CSI 300 Index, which tracks the performance of the 300 largest companies on the Shanghai and Shenzhen stock exchanges, rose as much as 5.5% on Monday before paring most of its gains to end the day just 1.17% higher.

Over the weekend, Chinese authorities halved the tax on stock trading, called “stamp duty”, and lowered the amount of collateral a trader must deposit in order to borrow money to invest in stocks in a bid to “boost investor confidence”. ” according to Google Translated by a statement From the Chinese Ministry of Finance. Beijing has also asked some mutual funds to avoid being net sellers of shares, Bloomberg reported mentionedciting unnamed sources.

Despite these moves, foreign investors continue to flee the Chinese market. with Beijing Choking Foreign advisory firms, amid tensions between the United States and China, have repeatedly asked investment firms to avoid them stock sale When markets appear fragile, investors seem increasingly nervous about the risks of holding capital in China.

In the first half of this year, the number of active hedge funds focusing on China decreased First time in more than a decade. In the second quarter, direct investment commitments — a measure of foreign direct investment in China — fell 87% from a year ago to a record $4.9 billion, according to figures released by China’s State Administration of Foreign Exchange on Friday.

China’s weaker-than-expected post-COVID-19 recovery and continuation Economic affairs– Which includes the property crisis, high youth unemployment, approx $13 trillion In the debt of local governments, the decline of industrial companies profitsIt also slowed down foreign investment in the country.

“The change in global capital flows is seismic,” Robin Brooks, chief economist at the Institute of International Finance, wrote in an article on Sunday. mail on “Over the past decade, China has attracted the bulk of capital inflows to emerging markets, often at the expense of other BRICS countries. But China has now seen steady and large outflows over the past 18 months, with investors increasingly wary of authoritarian regimes.

In a broader sign that China is becoming a less friendly place for Chinese investors and millionaires They are leaving the country in droves middle a organizational repression against large private companies. country will You lose a record 13,500 Millionaires this year, as estimated by new immigration advisory firm Henley & Partners Private wealth migration report. This comes after losing about 10,800 millionaires in 2022.

Fix a broken relationship?

It is against this backdrop that Commerce Secretary Gina Raimondo spoke on Monday He was seeking reform Torn relationship between the two countries visit to Beijing. Raimondo and Chinese Minister of Commerce Wang Wentao Agreed To form a group to “seek solutions on trade and investment issues” after several hours of discussions, indicating that Washington is changing its stance towards China.

“The world relies on the United States and China to responsibly manage and maintain our trade relations,” said the Commerce Secretary, adding that “the aim of this is to be a dialogue in which we increase transparency.”

Just days before Raimondo’s visit, the Ministry of Commerce did so Removal 27 Chinese companies from a list banned from buying American technologies.

Chinese Ministry of Commerce named The move is “conducive to normal trade between Chinese and American companies,” a statement said, adding that “it is now entirely possible to find a solution that benefits businesses on both sides.”

After meeting Raimondo on Monday, Wang also spoke in a positive tone. “I am willing to work with you together to promote a more favorable policy environment, for stronger cooperation between our companies to promote bilateral trade and investment in a stable and predictable way,” he told the US Secretary of Commerce.

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