Capital is leaving China at the fastest pace in more than 7 years, sending the yuan lower

• The pace of China's capital flight hit the highest monthly outflow since early 2016.
• Nearly $54 billion was sent overseas on behalf of banking clients.

Capital flight out of China has amplified in recent weeks, pulling down on the yuan in the process, as the economic outlook and real estate crash continue to weigh on investors.

Outflows have become a stubborn theme for Chinese markets in 2023, and $53.9 billion was sent overseas on behalf of banking client, according to State Administration of Foreign Exchange data cited by Bloomberg. That's the largest monthly outflow since January 2016.

As a result, the yuan is trading at around 7.30 against the US dollar, nearing the 7.34 level hit in September. Downside pressure has weakened both the offshore and onshore forms of the currency, despite Beijing's efforts to support its tender.

Stimulus measures have been complicated by rising interest rates in the US, forming the widest spread between US and Chinese yields in over two decades.

US Treasurys are especially hard to compete with now, as a historic bond sell-off has sent their yields to the highest levels since 2007.

Amid concerns that US rates will take a toll on global liquidity, China's tech-focused Star 50 Index fell to the lowest point in its three-year history, and the benchmark CSI 300 Index fell to its lowest since early 2019.

Through Thursday, global funds let go of $1.6 billion in onshore equities.

Meanwhile, China's current account and capital account also suffered September declines. Foreign funds reduced Chinese sovereign bond holdings by $1.85 billion.