Sensitive financial data on capital flows out of China is 'missing' from a PBOC report

Reuters/China Stringer Network

Sensitive data is missing from a regular central bank report in China amid concerns about the flow of cash out of the country as its economy slows and currency weakens.

Financial analysts say the sudden lack of clear information makes it difficult for markets to assess the scale of capital flows out of China.

Figures on the “position for forex purchase” are regularly published in a monthly report issued by the People’s Bank of China.

The data, however, is missing from its latest report on the “Sources and Uses of Credit Funds of Financial Institutions in Foreign Currencies”.

Another key item of potentially sensitive financial data has also been altered in the latest report.

The central bank regularly publishes data on the ‘foreign exchange purchase” position, which covers all financial institutions including the central bank. The figure was 26.6 trillion yuan (HK$31.7 trillion) in December.

The data published in January, however, only gives information on forex purchases by the central bank and details the lower figure of 24.2 trillion for last month.

China’s foreign exchange reserves shrank by almost US$100 billion in January as the central bank sells dollars and buys renminbi in an attempt to shore up the country’s weakening currency.

It followed a record drop of US$108 billion in reserves in December.

The press office at the People’s Bank of China bank has yet to respond to telephone calls or a faxed request for comment about the changes.

The central bank has tweaked items on its financial statements before, but the latest unannounced change comes at a particularly sensitive time when Beijing is trying hard to stabilize the yuan exchange rate.

It is also just a week ahead of the G20 central bankers and finance ministers meeting in Shanghai.

“The central bank used a non-transparent method which makes the market unable to have a clear picture about capital flows,” said Liu Li-Gang, chief China economist at ANZ in Hong Kong

“Given current circumstances, the move will fuel more speculation that the country is under great pressure from capital outflows. It will hurt the central bank’s credibility.”

An in-house analyst at an investment bank in Beijing, who declined to be named, said the changes were technical, but reflected the central bank’s intention to hide China’s real capital flows.

Reuters/China Stringer Network

Analysts said it was common practice to calculate China’s capital outflows by looking at the gap between positions on the yuan throughout the financial system and at the central bank alone, but the changes by the central bank would make this calculation impossible.

All data related to foreign exchange released by the central bank is closely monitored by financial analysts.

They often read item by item from the dozens of tables and statistics released by the People’s Bank of China to spot new trends and changes.

Xie Yaxuan, chief economist at China Merchants Securities, said the central bank was unable to conceal data as there were many ways to obtain and assess information on capital movements.

“We are waiting for more data releases such as the central bank’s balance sheet and commercial banks’ purchase and sales of foreign exchange released by the State Administration of Foreign Exchange for a better understanding of the capital movement and interpreting the motive of the central bank for such change,” said Xie.

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