Capital exodus from China reaches $800bn as crisis deepens

The Chinese central bank (PBOC) is being forced to run down the country's foreign reserves to defend the yuan. This intervention is becoming chronic. The volume is rising. Mr Brooks calculates that the authorities sold $48bn of bonds between March and June.

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Chinese industry ground to a halt earlier this year. Electricity use fell. Rail freight dropped at near double-digit rates. What had begun as a deliberate policy by Beijing to rein in excess credit escaped control, escalating into a vicious balance-sheet purge.

The equity surge had no discernable effect on GDP growth, and probably diverted spending away from the real economy. The $4 trillion crash that followed has exposed the true reflexes of President Xi Jinping.

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Lombard Street Research says China's true economic growth rate is currently below 4pc, using proxy measures of output. Capital Economics and Oxford Economics have reached a similar verdict with their own tracking systems... The extra growth generated by each yuan of new loans has dropped from a ratio of 0.80 in the pre-Lehman era to 0.24pc today. The trade-off has become toxic...

The early signs are that Mr Xi will now revert to stimulus again - hoping that he can calibrate the dosage, despite the Party's failure to do so on every previous phase of the stop-go cycle - concluding that it is too dangerous to let market forces do their worst after such vast imbalances have accumulated.