China's foreign currency reserves are likely to hit $1,000bn this month: enough to buy Citigroup, Exxon and Microsoft, with enough spare change for General Motors and Ford, as well. China's central bank buys dollars to stabilise its currency, the renminbi. Yet in spite of the renminbi's undervaluation, private capital seems to be leaving China. That is a conundrum. But even if the phenomenon is real it will not erase the pressure for, or the logic of, a higher real exchange rate.

China's exchange reserves did not keep up with its current account surplus between July and September. That means capital left China. To prevent the renminbi appreciating, the central bank has to buy enough foreign currency to offset the trade surplus, foreign direct investment and foreign money going into renminbi assets. With the trade surplus above $15bn in September, and no reason to think that FDI flows of about $5bn a month have stopped, only capital outflows can make the numbers balance.