China's closed capital account?

Can anyone offer a layman's explanation of the following sentence: "The Chinese stock market garners high valuations because of a closed capital account that allows limited outlets for excess liquidity. The market surge this year coincides with an increase in money supply."

In layman's terms: China doesn't allow their citizen's money to leave the country (especially since the banks and many big corps are at least partly if not entirely gov't controlled). Because the money can not go elsewhere, the only place it can go is into China's own markets. Thus the "limited outlets for excess liquidity." Chinese have a lot of cash coming in from all their exports and no where but the Chinese market to put it.

As for the large increase in money supply. I don't follow their central bank's movements too closely but it would make sense that they would be pushing up their money supply even as they put a lot of their incoming liquidity into US and EU bonds. They are going to do it slowly and with control so as to fight any inflation and not hurt their GDP growth, but when you're moving that fast you have to let the steam out somewehre (money supply increase), and it then has to disperse into somewhere else (Chinese stock market).

That about does it I think. Sorry if I repeated or rambled, was sort of typing as I thought.

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