How China Copes With Capital Flight
As growth slows and tariffs threaten, the central bank now strives to prevent a sharp slide in the yuan.
Watchers of China’s currency in the past few years have risked a serious case of whiplash. After tamping down the yuan’s appreciation for the better part of two decades, Beijing has begun to lend support to the sagging currency. Last month China used roughly $32 billion of its foreign-exchange reserves to bolster its currency. The yuan is dropping largely because China’s growth is slowing and capital has begun to flee the country.
For most of its recent history, China had little reason to worry about capital outflows of foreign...