Brandywine’s Chen Zhao on China’s Capital Flight

The video discusses the issue of capital flight from China, highlighting factors such as the impact of the Trump election on emerging markets, the surge of the dollar, and expectations of currency depreciation. It emphasizes the unsustainability of current policies and the need for dramatic reforms in China's foreign exchange market. Additionally, it addresses the trade imbalance between the US and China, noting the challenges in resolving this issue due to restrictions on certain exports.

What are some factors contributing to capital flight from China?

• Increase in Chinese exports

• Rise in Chinese interest rates

• Surge in the dollar and currency depreciation expectations

• Decrease in global oil prices

Why is China's policy of controlling both foreign exchange rates and interest rates considered unsustainable?

• It causes inflation to rise

• It is impossible to maintain with capital mobility

• It leads to increased foreign investment

• It results in a trade surplus

What is a major challenge in resolving the US-China trade imbalance?

• China's surplus of agricultural products

• US's lack of interest in Chinese goods

• US restrictions on certain exports to China

• China's refusal to import any US goods

Which two items are the largest imports from the US to China?

• Electronics and automobiles

• Soybeans and aircraft

• Textiles and machinery

• Oil and natural gas

What argument does China make regarding its ability to purchase US goods?

• China can buy unlimited quantities of US goods

• China is restricted from buying certain desired US goods

• China prefers to buy from other countries

• China has no interest in US technology