Chinese FX risk

Some comments on Chinese capital flows at the FT. China stems inflows of hot money:

"Qing Wang, of the Bank of America in Hong Kong, said in a research note that the authorities had made “systematic efforts to encourage major financial institutions to keep their foreign exchange assets offshore”.
This includes allowing state companies, such as the banks that have listed overseas, to leave some of the billions raised in initial public offerings offshore."

This seems to shift the risk to the private sector. Rather than force exchange for domesticic currency, the regulatory change means that USD are accumulated offshore by Chinese firms (offshor becauses domestic regulations require exchange for domestic currency). If it blows up, the burden is shared, but there is more likely to be profit motive in the firms' actions.