In the news: Chinese capital market turmoil discussed, GSK scientists steal trade secrets and Shanghai's VC compensation plan under fire
January 27, 2016 | BY
Katherine JoThis week China's stocks and capital outflows were analyzed, ex-Glaxo employees were charged with cancer drug data theft, investors criticized a local venture capital investment incentive and a probe into new-energy auto subsidies fraud began
China's stocks declined to a 13-month low this week – the latest example of the highly volatile start to the year for the country's financial markets. Investors are concerned about stability – and they appear to be fast losing confidence – in the ability of Chinese authorities to combat the turmoil. The unpredictability of policymakers has further called to question whether it is really the government's intention to give greater say to market forces, regardless of the currency's acceptance into the IMF's SDR basket. The pent-up desire of domestic investors to move their money offshore is in danger of coming to the fore when capital controls are eased. It is estimated that, in 2015, even with strict capital controls in place, $1 trillion left China – six or seven times more than the amount that left the country the previous year. If China really is going to ease controls further, outflows in 2016 could be off the charts and lead to the very financial instability that China is now trying to fight.
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