There is a worthwhile question to ask in this context: How much of this money could eventually come into India?

As with all matters Chinese, economists have been struggling to understand just how much money has left China over the past two years.

One easy indication is its foreign exchange reserves. This war chest had a record $3.99 trillion in June 2014 but now has only $3.2 trillion. These are the dollars that the Chinese central bank has sold to support the yuan as people switch to dollars.

There is another area of debate. The consensus view has been that Chinese citizens are taking advantage of fewer capital account restrictions to send money abroad. The sudden spike in imports from Hong Kong suggest that many firms are over invoicing of these purchases—a classic ploy used to take money out of a country.

The Bank of International Settlements has challenged some of these narratives in a recent report. Its detailed examination of capital flows suggests that there are two factors at play: the unwinding of offshore yuan deposits and the repayment of dollar loans by Chinese firms. Both have been triggered as expectations of an appreciation in the yuan have been replaced by fears of depreciation.

Most of the sleuthing has been focused on figuring out why China is losing capital. There is as of now little understanding about where the money is going. History tells us that capital tends to flow back into dollar assets when there is fear of economic instability—as is the case across the world right now.

But let us get into speculative mode. The capital flight from China is one result of the complicated attempt by the Chinese authorities to rebalance its economy. That includes tough decisions on currency value, financial sector reforms, average wages, closing the investment-savings gap, structural reforms and boosting domestic consumption. This process will take many years—and it is quite likely that capital will continue to flow out of China as its economy readjusts.

China has already been using its excess savings to further its geopolitical aims—and there are natural worries about whether India should play ball. But this capital flight is from the private sector rather than directed investment by the Chinese government.

The relative economic stability in India could eventually prove to be a magnet for such capital.

Will it? Nobody can say for sure. But it is a question that Indian policy makers would do well to begin thinking about.

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