A top Chinese official was arrested just hours after talking about the biggest threat to China's economy
(Reuters/Kim Kyung-Hoon)
A man wearing a mask during a polluted day at Tiananmen Square in Beijing on January 15.
A key Chinese official was just arrested.
Wang Baoan, the head of China's National Bureau of Statistics, was arrested Tuesday on suspicion of "serious violations of party discipline," according to CNN.
That alone isn't that unusual, as lots of Chinese officials have been taken down during China's anticorruption campaign.
What is newsworthy about this arrest, however, is what Wang said right before it.
He was giving a speech about the risks of capital outflows, which government data showed climbed to $1 trillion in 2015.
The government had previously estimated that outflows would hit $455 billion. Way off.
China has been trying to stabilize an economy that has been (seemingly) under siege since the beginning of the year. The stock market has been a whipsaw, falling precipitously on several occasions. And China's currency, the yuan, has been volatile as well.
Government officials have acknowledged that there will be slower growth during China's transition from an investment-based economy to one based on domestic consumption. They've also said they will start enacting reforms to deal with huge problems like debt and overcapacity in the country's corporate sector.
But capital leaving the country at a rate of $1 trillion a year is an even more immediate threat than that, and the problems that caused it — a depreciating currency, for one — have not gone away.
So, in an effort to stabilize the yuan, the government has warned yuan short sellers — even the legendary (but retired) hedge fund manager George Soros — to quit it.
Keeping the yuan from depreciating too fast cost the government $108 billion in December. The more short sellers try to push it in another direction, the more money the government has to expend.
Now everyone has to fall in line.
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