China endured its second month of capital outflows in four years in November as a slowing domestic economy and mounting global uncertainties led some investors to withdraw speculative funds.
Data showed China's central bank and commercial banks sold a net 27.9 billion yuan ($4.4 billion) of foreign exchange last month, pointing to capital outflows as Beijing usually buys foreign exchange on a net basis to rein in the yuan.
"It is very rare for the forex purchase position to drop for two months in a row, showing that the capital outflow is increasing," said Qiao Yongyuan, an analyst at the CEBM in Shanghai.
That capital is leaving China also reflected the country's shrinking trade surplus and slowing foreign direct investment in recent months as a festering euro debt crisis chilled activity, some analysts said.
Slowing exports narrowed China's trade surplus to $14.5 billion last month from October's $17.0 billion. For the year, the trade surplus is seen shrinking to $150 billion in 2011, from last year's $185 billion, Commerce Minister Chen Deming was quoted as saying in local media.
Qiao from CEBM said capital outflows may prompt China's central bank to cut banks' reserve requirements again to inject new money into the banking system. "The forex purchase figure may raise the chance for the central bank to cut the reserve ratio for banks in the coming months," he said.
The People's Bank of China cut banks' reserve requirements by 50 basis points in November for the first time in three years in an attempt to shore up economic growth in the face of easing exports and industrial activity.