HONG KONG, Dec 9 (Reuters Breakingviews) – The pandemic has allowed Chinese authorities to keep large sums of money in the country.with hope rising Capital outflows could be Beijing’s next headache due to the country’s full reopening, including borders.
The People’s Republic supposedly maintains tight controls by limiting citizens’ cross-border cash transfers to $50,000 annually. Still, jet travelers abroad in 2019 made him $255 billion, boosting hotel revenue in Thailand and sales of his handbags for the designer in Paris. Over three years, he will save $765 billion. Wealthy people also spend a lot of money abroad to send their children to Western schools and colleges.
The pandemic is acting as a barrier in China’s favor. Strict quarantine rules and passport controls prevent international travel. As a result, Chinese enrollment in U.S. schools for the school year ending 2022 fell to 290,000, a 22% decline from its peak two years ago. With exports doing well, China’s foreign exchange reserves remain above her high-profile $3 trillion mark, reaching a five-year high at the end of 2021.
China may be tempted to seek profit by closing its borders, as potential demand for spending abroad is likely to be higher. The economy is rapidly losing momentum, and the Federal Reserve’s rate hikes put pressure on the yuan, with the Chinese government depleting its $1 trillion reserves to protect the renminbi. brings back unpleasant memories of 2016.
There are also new reasons why people want to move money abroad. A surge in Chinese family offices in Singapore, where property prices are soaring, suggests that the ultra-rich are fleeing as President Xi Jinping’s move to common prosperity accelerates. The Henley Global Citizens Report estimates that 10,000 wealthy people will leave China this year, second only to Russia. Following Covid-19 restrictions and related protests, many in the middle class may also be gloomy about their prospects at home.
But capital flight may cost China less to pay than the cost of staying closed.Threat of global economic slowdown export – One of the country’s last economic bright spots: November orders fell 8.7% more than expected. Enabling sellers to meet overseas customers is one obvious way to mitigate the crushing of this growth engine by rising geopolitical tensions.
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China’s National Health Commission said on Dec. 7 that people with mild symptoms can now be quarantined at home. It also eliminates the need for mobile apps to test and check health status for various activities such as traveling around the country.
Chinese travel platforms from Trip.com to Qunar have seen a seven-fold jump in searches for flights to Chinese cities such as Sanya and Harbin attractions, Reuters reported on the same day. New Year’s Eve in January.
Edited by Una Galani and Thomas Sham
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