Thus, we can say: 1) outflows are sizable but exaggerated in reserves (Feb should be telling given EUR’s surge); 2) China paying down FX debt is part of the equation, so it’s not all hot capital flight; 3) China’s overall debt is a problem but mostly in its own currency, so it has more means of dealing with it than other EMs in the many well-known debt crises of the past 30–40 years. I’m still waiting for a good explanation of why China can’t monetize its local FX debt and not hobble households in the process.
Here is more, of interest thoughout (which is not quite the same as “interesting throughout”), Eric is less bearish than many, worth the read. That said, the latest trade data are not looking so good.
Hat tip goes to www.macrodigest.com.