"Diamonds Are An Easier Way to Move Private Wealth than Gold Bars !"

HONG KONG: In Beijing, an online real estate brokerage has organized a 40-person buying tour to real estate foreclosure auctions in the United States this month, and it had so many applicants that it had to turn away nearly 400 people.

In Shanghai, cash-rich Chinese companies are buying high-yield bonds of American companies in distress, and bringing home fewer of the dollars they earn abroad from exports.

And in Hong Kong, wealthy Chinese from the mainland are turning up in growing numbers at jewelry stores here seeking one thing: diamonds, big ones.

"They're looking for five-carat diamond rings and six-carat diamond earrings - three carats for each ear," said Yollanda Lam, the marketing manager for the King Fook chain. "Because of the stock market and all, definitely people are more willing to buy fine jewelry."

Chinese citizens are starting to send more money out of the country and overseas investors are pulling money out of China while slowing their pace of new investments. The result has been a shift in what has been one of the biggest trends in international finance over the past five years: China's central role in bankrolling trade and budget deficits elsewhere, most notably the United States.

Concern as money moves out of ChinaWall Street's new statusU.S. officials struggle to put a price on toxic loansTo prevent China's currency, the yuan, from rising in value, the Chinese government has been buying up the dollars pouring into the country from trade surpluses and foreign investment, accumulating more foreign exchange reserves than Japan, Saudi Arabia and Russia put together. It has paid for the dollars by printing more yuan and invested at least two-thirds of the dollars in American securities, particularly Treasury bonds.

China still has torrents of cash pouring in from trade surpluses, as imports shrank faster than exports in the final months of last year. But that inflow has been nearly balanced in recent months by an unexpected outflow of private cash from the mainland and a slowing of investment into the mainland.

The quarterly pace of accumulation in China's foreign exchange reserves plunged 74 percent over the course of last year. In the fourth quarter of last year, it reached $40.45 billion, the lowest point since the spring of 2004, when China's reserves were still much smaller than Japan's.