When Chinese conglomerate HNA paid 80 per cent over the market rate for a plot of land on the site of Hong Kong’s former airport in Kowloon late last year

, there was little surprise. Many analysts simply assumed the lofty price was paid to get around the increasingly stringent controls on capital outflows from mainland China.

In the past, when Chinese firms wished to buy companies or assets offshore, they could simply get the foreign branches of local banks to issue letters of credit offshore against cash they had on deposit back in China. However, today regulators in Beijing are discouraging such arrangements as they seek to keep capital from flowing out of the country and further weakening the currency. These efforts are part of a broader attempt to rein in leverage which increasingly threatens financial stability.