China’s prospects of a “lost decade” leads to capital outflows from local stock market
According to the Atlantic Council, foreign investors have been selling Chinese stocks in large numbers over the past two years, disappointed by the strengthening influence of Xi Jinping and the growing geopolitical tensions.
The outflow of investors is related to the increasing investment risk in China, analysts believe. Unfavorable economic indicators in China lately, particularly the uneven recovery of the economy after COVID-19, serve as a kind of "fuel" for this trend.
Foreign fund managers have sold a significant amount of Chinese securities in response to Xi Jinping's policies and the growing tension between the United States and China.
Speaking of numbers, institutional investors have sold $148 billion worth of Chinese bonds since the beginning of 2022, causing a sharp decline in Chinese stocks.
One former IMF official even predicted a "lost decade" for China's economy, which bodes ill amidst concerns about economic prospects. In addition to setbacks in China's post-pandemic recovery, the country faces long-term structural problems such as rapid aging of the workforce, low productivity, increasing inequality, and a general crisis of ownership.
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