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By Chi LO, Senior Economist BNP Paribas Investment Partners
"Change is the law of life. And those who look only to the past or present are certain to miss the future." John F. Kennedy
When China’s capital account was completely closed, life was simple for Beijing as it only needed only to deal with current account flows. Since 2000, foreign direct investment (FDI) has flooded in, cracking open China’s capital account. Both China’s current account and FDI have recorded net inflows, putting persistent appreciation pressure on the renminbi for over a decade. However, the tide is now turning, with capital outflows interrupting the renminbi’s strength. Welcome to the renminbi’s “new normal”, where volatility has finally become a reality(1) rather than an...
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