State Administration of Foreign Exchange

China is so concerned about the ongoing surge in capital outflows that its forex regulator, SAFE, has taken the unprecedented step of ordering banks to keep its instructions about curbing capital outflows secret and also to ensure that research analysts do not publish any negative views about the yuan according to Reuters.  According to bankers from local and foreign banks, both demands are seen as an attempt by the authorities to prevent alarm that could trigger further declines in the yuan. 

In the latest revelation of just how far China, and its central bank, are willing to go to prop up its ailing local stock market, on Thursday the official Shanghai Securities News reported that China's foreign exchange regulator has bought mainland stocks worth over 27 billion yuan ($4.18 billion) via three low-profile investment firms it controls.

When it comes to following China's capital outflows, the traditional place to keep track has been China's official reserve data released monthly, which however as we showed previously can and often is manipulated to give the impression of generally smalle numbers. We noted one example in October when China disclosed an official outflow of $43 billion, yet this number was largely incomplete, and short of the total, due to the PBOC's recent adoption of using currency forwards to manipulate the Yuan, something not tracked by the official reserve number.