While managing a capital outflow crisis as foreign investors cash out of the market and companies repay dollar loans amid a depreciating currency, China’s policymakers have implemented a wide array of tools since 2014 to plug the leakage, by tightening capital controls and exhausting foreign exchange (FX) reserves to defend the renminbi. An estimated $1.2 trillion has flooded out of the country since China’s shock currency devaluation in August 2015, most notably in the form of outbound M&A, fake trade invoices, and overseas insurance and property purchases.
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