What’s USD30bn to China, anyway?

More finance. I need to get back to something Environmental, or cars, or something.

China is to treble the amount of money that foreigners can invest in the mainland capital market, making the long-awaited announcement on the eve of this week’s high-level economic summit between Chinese and US policymakers.

The State Administration of Foreign Exchange, the country’s foreign exchange regulator, said on its website on Sunday that the quota for registered foreign investors would be increased from $10bn to $30bn. It could take several months before institutional investors secure fresh quotas.

Good for openness in foreign capital movement – don’t get me wrong – but before we get too carried away, don’t forget how much capital going out: that USD30bn compares with a few hundred billion US dollars in Sovereign Wealth Fund money, not to mention new, looser, rules for their total capital outflow.

Baby steps are still steps, of course.

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