Analysis For Trends And Coping Strategies Of Domestic Capital Outflow

Since the financial crisis in2008, with the changes of themacro-economic situations and the internationalization of the RMB, thecross-border flow of domestic capital is becoming more and more open. Itprovides opportunities for overseas institutional investors and high net worthclients to enter the Chinese market. And it also creates the conditions ofChina’s capital outflow to overseas. Under the new trends of capital flows,domestic capital outflows are increasing gradually. According to economistCharles Dumas of the research institutions “Lombard Street Research”, heestimated that China’s net capital outflow reaches about300billion U.S.dollars in2012. Now the channels of capital outflow in China are including:overseas mergers and acquisitions, bank lending and borrowing, internationaltrade and underground banking.This paper starts from the analysis of capital outflow’s definition, causesand impact. And then by calculating the scale and trend of China’s capitaloutflows, the paper makes a detailed analysis of China’s capital outflow andits corresponding impacts. In the paper, it also uses regression analysis for quantizing the factors of China’s capital outflow.It is also discussed in the paper that the case study of capital outflow inforeign countries as well as the coping strategies of capital outflows in China.There are five recommendations discussed in the paper, including improvingof China’s RMB exchange rate mechanism, etc.