An employee counts money at a branch of Industrial and Commercial Bank of China in Huaibei, Anhui Province. China reported the largest deficit in its capital and financial account in more than a decade for the last quarter of 2014.

Beijing/Dow Jones

China reported the largest deficit in its capital and financial account in more than a decade for the last quarter of 2014, the latest evidence showing that capital is flowing out of the country.
China recorded a deficit of $91.2bn in the period under its capital and financial account, which covers investments, the State Administration of Foreign Exchange said yesterday, based on preliminary estimates.
The figure is the largest quarterly deficit under its capital and financial account since at least 1998, according to data provider Wind Information Co, though the data are estimates and often subject to wide revisions. It brought the capital-account deficit for the full year to a preliminary $96bn, after a revised deficit of $9bn in the 2014 third quarter.
China has been facing capital outflows as its economy slows and the nation’s currency weakens. The government has also been encouraging domestic companies to play a bigger role in the global economy by investing overseas.
Economists have said that slower economic growth and rising labour costs are making China a less attractive destination for some types of foreign investment, while the weaker yuan is convincing some exporters to hold on to foreign exchange instead of converting it into the local
currency.
In the fourth quarter, China had a surplus of $61.1bn in the current account, which covers trade in goods and services. It had a surplus of $213.8bn for all of 2014, according to initial estimates, and that included a revised surplus of $72.2bn in the third quarter of last year.
In 2013, China posted surpluses in both its capital and current accounts, with the capital account showing a $326.2bn surplus and the current account surplus at $182.8bn. The data are largely in line with other data released by the government. China’s central bank and financial institutions sold a net 118.365bn yuan ($18.91bn) of foreign exchange in December, reversing a net purchase of 2.17bn yuan in November, according to a Wall Street Journal calculation based on central-bank data issued last month. Foreign exchange purchases by the banking system are widely seen as indicative of capital flows.