Capital Flight: Pressure on China’s RMB & Capital Account

Arthur Kroeber, Dragonomics
05/01/2017

Capital Flight: Pressure on China’s RMB & Capital Account Trump Tariffs: How China Could Hurt the U.S What You Should Be Watching For

1. How a strong dollar rally will...
--- cause Chinese companies and investors to start moving assets out of the RMB and into dollars
--- put pressure on China's capital account.
2. Why you should be prepared to make a decision about whether Trump's moves are symbolic or substantive.
--- A symbolic move would be declaring China is a currency manipulator
--- A substantive move would be an across-the-board tariff on Chinese imports.
3. How China could retaliate to tariffs...
--- put all their orders for Boeing airplanes on hold
--- restrict imports of U.S.soy beans and enforce phytosanitary regulations to prevent more broadly U.S. exports of agricultural goods to China
--- ratchet up the pressure on U.S. businesses operating in China through informal regulatory enforcement, and otherwise make life very unpleasant for them
--- even do something like disrupt the iPhone production chain in China.