Global Banking Cross Border Claims : Decreasing Chinese Claims since 3Q2014 with Capital Outflow

Below graphs are from BIS data. All is about cross border claims of global banks.

Global banking cross border claims have been shrunk since financial crisis led by developed countries. While DM banks decreased claims, EM banks claims moderately increased, so the portion of EM's had increased since under 10% in 2007 to above 15% in 2012 during last 5 years. And recently EMs' position of cross border claims of banks continues to grow as well.

In developed countries, the major position of claims is consist of European banks'. And since financial crisis, decline in European banks' cross border claims have led downward trend of the whole claims. In other DMs, whilst Japanese banks' position has been stable, banks in United States have increased cross border claims continuously making up decline in European banks'.

And in EM particularly, banks claims have increased by Asia and Pacific region mainly. For now, the banks in A.P. claims are almost half of total EMs'. Especially in Chinese banks, cross border claims are showing too rapid growth! The weight of them against EM banks' rose almost 25% and against Asia & Pacific rose almost 50%! Maybe many institutions and companies in EM depend on capital from Chinese banks now.

But, since 3Q last year, Chinese banks' claims started to decline somewhat faster when the worries of capital outflow from China arose. Recent under-performance of Asian asset prices against other EMs maybe was caused by drought in capital from Chinese banks.

Considering low weight of Chinese banking cross border claims to the world, the possible financial crisis from China could not lead global recession. But, they could impact on EM, especially Asian countries. So, when China is under movement of capital outflow, Asian economy should pain...

However, I am somewhat skeptical that this problem could lead another shock for global or Asian economy. Decline in Chinese banks' claims are already done for last 3 quarters and Chinese government still try to control their capital. Worry about this could remain for a few months, but I think we should consider the possibility that this woes were overstated for now...