China's external current account is, as we know, in surplus, and usually the capital account is also in surplus: foreign capital flows in to invest in a rapidly growing country while Chinese savings are enclosed within the country and obstacles to capital outflows are part of a regimented currency system. But something is moving here too. For two months now, China has been experiencing capital outflows: Chinese banks' net purchases of currency were negative (for the first time in four years), albeit by a few tens of billion yuan, in October and November, after posting monthly positive results of hundreds of billions of yuan since the beginning of the year (see chart).
Behind these trends there is certainly a large reduction in the contribution of currency from current operations: the rebalancing of current balances around the world is underway, and in China the development model tends inexorably to shift towards the growth of domestic demand.
http://www.chinadaily.com.cn/business/2011-12/2
