from the Dallas Fed
— this post authored by J. Scott Davis
China’s foreign exchange reserves and the value of its currency peaked in 2014. From mid-2014 to year-end 2016, foreign exchange reserves fell $1 trillion, amounting to about 10 percent of gross domestic product (GDP). Meanwhile, the yuan lost about 14 percent of its value against the U.S. dollar.
Chinese foreign exchange reserves have since stabilized, with the currency appreciating about 4.5 percent in the first nine months of 2017.
Two lines of thought have attempted to explain the currency’s behavior. One is that Chinese capital controls prevented the type of capital flight from the country that could turn balance-of-payments instability into a broader currency calamity. The other supposition is that foreign capital returned to China with the reemergence of global growth and investment prospects there.
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Source
https://www.dallasfed.org/~/ media/documents/ research/eclett/ 2017/el1712.pdf
