Standard Chartered analysts say that their estimates revealed that modest non-FDI outflows of USD 16.4bn resumed in May for the Chinese economy, following moderate inflows of USD 10.4bn in April.

• “The mild outflows suggest broadly stable market expectations, despite sharp depreciation of the Chinese yuan (CNY) in the first half of May. Several financial officials made comments to stabilize the market, keeping USD-CNY firmly around the 6.90 level in the second half of the month.
• FX assets held by the People’s Bank of China (PBoC) fell by a modest USD 0.2bn in May, following a small USD 0.1bn decline in April; this suggests still-balanced overall cross-border flows. The merchandise trade surplus widened to USD 41.7bn in May from USD 13.8bn in April, partially offsetting the estimated services deficit of USD 25.0bn.
• Outflow pressure in May could have been much worse given the jump in USD-CNY above 6.90 amid renewed US-China trade concerns. We expect trade negotiations to resume after the meeting between Presidents Xi and Trump at the G20 summit, supporting our view that USD-CNY is unlikely to break above 7.0 in the short term.”