China has suffered from outflows from its foreign reserves for months. Goldman Sachs and Standard & Poor's can't agree why.
Capital outflows from the world's second-largest economy have been sizeable recently, as reflected in the country's foreign exchange reserves, which analysts use in the absence of official figures detailing the flow of capital.
China's foreign exchange reserves fell to $3.19 trillion in May, the lowest since December 2011, down $27.9 billion from the previous month and the largest monthly drop since February, Reuters reported in early June, citing central bank data. Data for June are due on Thursday.
China saw a total drop in reserves of around $513 billion in 2015, with $420 billion of that in the last six months of the year, Reuters reported. Reserves fell by nearly $108 billion in December of last year, by nearly $100 billion in January and by around $28.57 billion in February of this year, before rising in March and April, Reuters reported.
Goldman Sachs estimated that net capital outflows from China in the first quarter of 2016 were around $123 billion, compared with around $504 billion in the second half of last year.
It believed that around 70 percent of the net outflows were due to Chinese residents buying foreign assets and 40 percent due to repayment of foreign-exchange liabilities. This was offset by an increase in inflows by foreigners buying renminbi-denominated assets.
That somewhat contradicted an analysis by the Bank for International Settlements (BIS), published in March, that suggested a big chunk of the outflows were related to unwinding a once-faddish investment: Buying yuan offshore as a play on expectations would continue to appreciate against the dollar as well as the mainland's slightly higher interest rates amid a yield-starved world.
Of the around $175 billion decline in cross-border loans to China in the third quarter of 2015, nearly half came from offshore depositors backing out of the yuan, the BIS said, citing data from banks reporting to it.
Another big chunk came from Chinese companies paying down their foreign debt, said the BIS, which acts as a bank to central banks. It found that Chinese firms reduced their cross-border net debt over the third quarter, with the amount denominated in currencies other than the renminbi accounting for around $34 billion of the outflows.
But Goldman highlighted that it was skeptical of the offshore debt repayment narrative.
"While it is possible that some residents' acquisition of foreign-exchange assets now is intended for repayment of foreign-exchange debt later, this does not appear to be the case for the second half of last year," Goldman said in the note Monday.
Other analysts had still different explanations for the outflows.
"We were never really big fans of that capital outflow story because as far as we could tell a lot of it was just exporters keeping their money offshore instead of repatriating it," Paul Gruenwald, chief economist for Asia-Pacific at S&P Global Ratings, told CNBC's "Squawk Box" on Monday. "That shows up as a capital outflow in the balance of payments."
Gruenwald also expected Chinese companies paying off offshore debt was a driver of outflows.
"We had Chinese firms doing essentially liability management. They were paying down their overseas loans and re-contracting onshore in Chinese yuan. That also counts as a capital outflow," he noted.
When it came to Chinese residents buying offshore assets, Gruenwald differed significantly from Goldman's analysis.
"It was hard to find evidence of lots of people with suitcases taking money over the border," he said.
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—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1