The Falling Dollar and China’s Foreign Exchange Reserves

Stiffened capital controls help.

The weak dollar, China’s complex web of capital controls, and its efforts to crack down on its huge and over-leveraged conglomerates to invest overseas are having an impact:

China’s foreign exchange reserves – the largest such pile of foreign-currency-denominated securities in the world – rose by $21 billion in December to finish the year at $3.14 trillion, according to the People’s Bank of China today. It was the highest level since September 2016 and the 11th month in a row of gains since the panic-moment in January 2017, when reserves had fallen below $3 trillion. Clearly, at $3 trillion, authorities drew a line (chart via Trading Economics):

Over the 12-month period, foreign exchange reserves rose by 4.6%, or $129 billion, the first annual increase since 2014, which was the year when forex reserves peaked at nearly $4 trillion before starting into a downward spiral as Chinese individuals and companies were trying to get their money out of the country, as the yuan was sinking against the dollar, and as a little while later, Chinese stocks crashed from astonishing bubble highs with astonishing speed.

In 2017, as authorities were trying to stem capital outflows, the yuan, which is pegged against the dollar, also rose for 11 months in a row against the dollar.

Seen another way, the dollar fell against the yuan in 2017, but it also fell against other currencies. 2017, based on the broad trade-weighted dollar index, was the worst year for the dollar since 2003. It currently takes 6.49 yuan to buy a dollar. A year ago it took about 6.97 yuan.

The falling dollar has reduced the heat from under Chinese individuals and companies trying to get their money out – which might have helped slowing the outflows.

But how much, if any, of the 4.6% increase in the foreign exchange reserves last year is due to actual increases in foreign exchange instruments, and not just due to the decline in the dollar?

Authorities have already admitted that at least some of the rise of the reserves last year is due to the decline in the dollar against other currencies. The values of non-dollar currencies in the reserves are translated into US dollars. So a decline of the dollar against those currencies would increase the dollar level of those non-dollar holdings.

For example, the euro soared 14.5% against the dollar in 2017, the Canadian dollar rose 7%, and the Japanese yen nearly 4%. Even if the level in China’s reserves of those currencies has not changed in absolute terms, it would have risen sharply because the dollar, into which they’re translated for publication purposes, has tumbled.

So the rise of China’s foreign exchange reserves is a mixed bag: perhaps an indicator of the effectiveness of the capital controls and certainly an indicator of the tumbling dollar.

And for now, China does not appear to be relenting in its controls to stem capital outflows. On the contrary.

In December, for example, the State Administration of Foreign Exchange announced that individuals are allowed to withdraw a maximum of 100,000 yuan ($15,400) a year from their Chinese bank accounts while overseas, in total, spread over however many separate bank accounts or ATM cards they may have. Until then, they could withdraw 100,000 yuan per card. So if they had multiple cards and accounts with several banks, they could convert a lot of yuan into USD while overseas. This no longer works.

In the same vein, earlier in 2017, the National Development and Reform Commission, China’s economic planning agency, has increased its scrutiny of outbound acquisitions by private Chinese firms and has brought their overseas subsidiaries under its oversight.

Today, the State Administration of Foreign Exchange said as part of its announcement, reported by the South China Morning Post, that it would keep foreign exchange reserves and international balance of payments “balanced and stable” in 2018. SAFE cited the decline of the dollar against other currencies in December as one of the reasons for the increase in the dollar value of China’s forex reserves. And this dollar value of the non-dollar portion of its forex reserves is an accounting entry, more dependent on the value of the dollar than anything else.

Central banks are leery of the newly arrived Chinese yuan. Read…  US Dollar Refuses to Die as Top Global Reserve Currency

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  66 comments for “The Falling Dollar and China’s Foreign Exchange Reserves

  1. I don’t comprehend how reserves held in Treasury Bonds could possibly appreciate with a decline in the dollar.

    • Jonathan Vause says:

      they didn’t. the value of euro and other holdings increased in value in dollar terms, is all

    • robert sinclair says:

      they could have been buying more, which seems the logical conclusion especially as they were projecting increases in their reserves several months ago. or did they know the dollar was going to fall so they increased their euros reserves etc ? The former makes the most sense to me.

    • Wolf Richter says:

      Only part of China’s Forex reserves are in dollar-denominated securities (Treasuries and the like). The rest are in securities denominated in other currencies, such as bonds denominated in euros whose value gets translated on paper into dollars for public reporting purposes (everything is reported in dollars). So China’s holdings of US Treasury holdings are not impacted. But China’s holdings of German bonds or French bonds are impacted.

      • yes but those parts are in trillions. focusing on China’s reserves (held by Treasury) they are not going to appreciate if the dollar falls. and the trade weighted dollar is an anachronism. Jim Rickards predicts the demise of the dollar because that is implied US policy, drop the dollar and bring back jobs. that’s the game, China’s reserves are increasing because they need more dollars (equivalents) to sell the same amount of stuff or they need a higher yield. Trump promised to default, which he can do using the dollar. There is a rogue asteroid which is going to slam into earth, but its made of gold so we will all get rich.

  2. Drango says:

    There are all kinds of strings China can pull behind the scenes to increase dollar liquidity. Just look at the mysterious weakening of the Hong Kong dollar and the equally mysterious strengthening of the Yuan. But these are just temporary measures. Eventually China will have to pay the bill for these measures, and even more dollars will be needed. But the dollar will keep rising, and it sounds like China is running out of options.

    • Frederick says:

      I wish that I believed you because I’ve got a boatload of Dollars The trouble is I don’t and will need to start selling off my dollar accounts very soon like tomorrow morning Luckily I bought some gold and Euros in August so I’m somewhat hedged but the dollar is looking very sick lately to me anyway

  3. MF says:

    I’ve noticed that every time someone predicts the implosion of China’s economy based on this-or-that thing (stock bubble, forex declines, ghost city construction, etc.), the thing does its thing and China carries on as before.

    I think there’s a basic assumption in the English-speaking commentariat that because China is a command economy it must fail. The companion assumption, necessarily, is that Western nations have market-based (opposite of command) economies.

    I think China’s enduring success has little to do with its political structure and more to do with what it considers capital.

    Because it represents half the weight of the flywheel of the global economic engine (the U.S. being the other half, and every other nation representing various other essential moving parts), it has no choice but to participate in this crazy debt game everyone’s playing. Money is debt and vice versa, thanks to double entry accounting. However, China uses its money/debt flows to finance actual capital, unlike the U.S. which uses the same to finance … financialization.

    It’s not about command vs. markets. It’s about what you create with debt/money flows (ironically called capital flows). Markets thrive in dictatorships and dictators thrive in markets. The forex market isn’t controlled by a single entity. But China’s monetary dictators use their reserves as a giant currency risk hedge fund to mitigate against the U.S. advantage of commanding the world’s reserve/petro currency. It’s probably a mistake to assume that it will end badly for them. Even if it all evaporates tomorrow, they still have dozens of brand-new cities (hard capital).

    This brings up a side question: why don’t we hear about ghost cities anymore? I suspect it’s because they’re quietly getting filled.

    • Nicko2 says:

      You make some good points. Consider the New Silk road…. over $1 trillion spread across dozens of countries, building infrastructure to power growth for the next century— contrast to Trump’s $1.5 trillion tax cut for the already wealthy. Which is more beneficial to the world?

      • Gary says:

        We have yet to see what becomes of this “New Silk Road”. Just assumptions for now.

        • Kraig says:

          Already being used to shave shipping time to europe/UK. Two weeks from 40 days. Time is money. I think there also a UK company exporting coccles (local seafood) to China via it.

      • Raymond Rogers says:

        So you don’t want tax payers to decide what their money is spent on? You would rather have a command economy?

        I’ve seen those projects. Maybe we can do what New York does and build subways at billions of dollars per mile.

        • MF says:

          @Raymond Rogers:

          Google: “The influence of elites, interest groups and average voters” if you’d like to dive into the most comprehensive study ever done of the ability of U.S. voters to affect policies (tax and otherwise) that affect themselves.

          So you don’t want tax payers to decide what their money is spent on? You would rather have a command economy?

          What I want is irrelevant to the facts. Given the data, my operating assumption is that the U.S. is a command economy, albeit a different flavor than China’s.

          An analysis of whether a command economy is superior or inferior to a decentralized one is irrelevant to a discussion about China’s forex policy and its likelihood of meeting China policymakers’ goals for its economy. This is because there is no large democratically-controlled economy wielding a substantially different forex policy that challenges China’s in a meaningful way.

          Thus it’s a moot point for discussion here.

      • Ricky says:

        Wolf, how come no mention on here about the Shanghai Oil Futures Contract priced in Yuan coverage on here….I know it keeps being delayed but the release looks imminent…I mention this because Ive seen a lot of dollar bull coverage on here lately…But with the rise in Bitcoin (always pictured in gold) and Ethereum (always pictured in silver) and ripple (which will be the common unit of value that banks will use in interbank transactions between 2 different cryptos, which is kind of exactly what the USD is used for know, just not in the crypto world) it looks the the groundwork is being setup for the coming changes that this website doesnt seem to keen on…..Thoughts???????????????????

        • Wolf Richter says:

          China is a huge buyer of oil. They already have bilateral deals with Russia and others on pricing oil in their own currencies. So futures contracts priced in yuan make sense to me. This move has been made out to be a huge earth-shattering deal, but I don’t think it will impact the price of oil or the dollar. It does show that China is trying to throw its weight around financially, as is expected.

    • James Levy says:

      I would agree that China has used its debt, on the whole, more wisely than the United States has, but too much of anything is not a good thing. Vast productive overcapacity is no better than multiplying billionaires and building bigger financial institutions. What just about every nation lacks is balance, and that to me is a fascinating thing.

      • robert sinclair says:

        China using its debt wisely? Sounds like an oxymoron.
        Its currency is valued by its foreign exchange reserves. And they get paid in dollar debt which they reinvest in assets which guarentee the same and future debt. Whats wise about that ? They could be increasing their gold reserves which would then, be rising in value instead of dollars which appear to be in terminal decline, as budget deficits and government debts and deficits increase. They are weakening their economy for the benefit of the bankers

        • Ed says:

          China is buiding up a manufacturing economy which will survive through the next financial crises.

          I wonder if U.S. and European technology tranfers to China, which are still happening at a company-by-company level with pressure from the Chinese Government look anything like transfers from Britain to the U.S. in the 19th century? It seems to me that it’s fundamentally different and that Chinese Gov’t intervention has managed to seriously accelerate the process.

        • Rates says:

          First of all, China’s gold reserves is unknown. In fact the US’s true gold reserves is also unknown. The later could be zero.

          All I know is that the economy seems to be chugging along.

        • Raymond Rogers says:

          I have a sneaking suspicion that China’s gold reserves are higher than they state they are. If you want to purchase massive amounts of gold, the last thing you want is for the price to rise before you complete your aquisition.

    • Ed says:

      The U.S. apparently spends north of $800B per year on the military. and roughly $1000B on social security and $1000B on healthcare. I think this breakdown (to get the $800B) is in the ballpark:

      If the pols wanted to do future Americans a favor for a change, they’d rein all three of those in a bit in favor of education, basic research, infrastructure, and, yes, debt reduction / GDP.

      Both the spending choices and the choice not to tax are a generational issue. It seems deeply unpatriotic to treat future generations this way.

      Here are two charts of the history of U.S. debt, showing the trend up from 32.5% in 1980 to over 100% now with only a short break in the increase in the late 1990’s.

      • Raymond Rogers says:

        No the DOD proposed budget was 639 billion, not North of 800B

        Some people when they want to overinflate DOD numbers lump in law enforcement and other expenditures in what is often called the militarized part of the budget.

        • timbers says:

          If you count the secret spending, I would not be surprised if the figures were closer to $1.2 to $1.4 trillion. But we just don’t know, and it’s meant to be that way. This would include the secret spending the government does on illegal and unconstitutional surveillance of you and me, and the military’s slush fund to finance it’s illegal and unconstitutional wars and aggressions against various nations.

        • Kent says:


          Correct. Funding for most actual war activities are “off budget” expenditures. Which is why the national debt is running up faster than the annual predicted deficits would have it.

    • Gary says:

      Well MF, my take on things:

      The USA rules the world. Other countries send tribute. The Arabs send precious oil, the Chinese send manufactured goods. The USA sends paper thank-you notes in return. Am I oversimplifying things?

      • MF says:


        I tend to see the U.S. and China in mutual orbit, like twin stars. I used the flywheel analogy because the U.S. cannot dominate like it does without China, and vice versa. They are the momentum that keeps the world economy running at a predictable and consistent RPM.

        Through this lens, the U.S. has absolute hegemony in all of the Americas and exercises it in very obvious ways. Likewise, China does so in Asia, albeit more tenuously in places like India. I’ll note that if North Korea were situated in South America, it would have been Grenada’d by now. I’ll also note that the U.S. is in the process of losing the Philippines, probably forever (ironically, one of the first conquests of the nascent U.S. empire).

        We went from a bilateral (U.S./U.S.S.R.) balance of power to a unilateral (U.S. alone) one for a while. Now we’re heading into some sort of multilateral balance of power with strange attractors appearing to be settling in on Moscow, Berlin, Washington D.C., Bejing, and New Delhi. As always there are counterpoints coming from places such as Silicon Valley, Warsaw, Catalonya, Caracas and Taipei, but it’s anyone’s guess as to whether they cause a magnetic pole shift, or if they just feed in enough balance to provide stability to the center of power.

        Info on strange attractors:

    • Maximus Minimus says:

      You hit the nail on the head. The Chinese have managed to create impressive gains in every aspect, and increase the living standards without a need for democracy. That is infuriating for those who peddle democracy as a precondition for free market, wealthy economy. There is certainly corruption, but while it’s full steam ahead (at the expense of US and Europe, one might say), there is little movement for change. The best way to bring China down is for ECB, and the FED to raise rates to 5-ish percent.

    • Gregor says:

      I’ve noticed that every time someone predicts the implosion of China’s economy based on this-or-that thing (stock bubble, forex declines, ghost city construction, etc.), the thing does its thing and China carries on as before.

      China’s competitive advantage is that it is a command economy. Unlike market economies China does not have to write down debt (or even acknowledge it). Hence you can build ghost cities out to the horizon with less short term downside. In the USA firms can fail.

      China is being given a free pass on its falseified GDP and other economic indicator because of its cheap labor pool and friendly environmental polices. Notice that the Yuan is largely rejected by the IMF basket of currencies? They keep propping up their economy with easy credit and it’s doubtful they can ever transition to a consumer based economy when they are a ward state of the USA.

      Ask yourself why so many Chinese are running to the US or Canada to get out of the Yuan. The emperor has no clothes.

      • alex in san jose AKA digital Detroit says:

        If you’ve stolen a bunch of money and you have a feeling you might, at least eventually, get caught, you get out of Dodge too.

    • Tom says:

      What I have been reading there is allot of gold heading to the east ;This brings to mind that the chinese are hedging against all fiat currency.

    • kam says:

      Hard assets that have no payback, is still wasted capital- today’s or tomorrow’s saved income lost.

      A command economy, like a war economy, is an engine that can be revved to the max, but not forever.

  4. cdr says:

    you say ‘Yuan’ I say Yawn.

  5. Petunia says:

    During the Xmas shopping season I was in several big box discount stores, the kind that sell a lot of Chinese stuff, they looked looted. I try to avoid buying Chinese junk but I’m in the minority. I was in one store a few days after Xmas and it looked like they had been cleaned out. I think the Chinese are doing just fine.

  6. OutLookingIn says:

    China’s FX dollars are held in the form of US Treasuries (aka) BONDS.

    Bonds trade based on inflation expectations.
    When inflation climbs higher, so do Treasury Bond Yields.
    When bond yields rise, bond prices fall.
    When bond prices fall, the bond bubble bursts.
    When the bond bubble blows?
    The everything bubble blows up.

  7. Bobber says:

    You can gauge the rise or fall of a nation by how hard its people work and produce. Once you back out useless financialization efforts from US activities, and useless media output, both of which do nothing to build wealth, you see that China is on the rise and the US is on the decline.

  8. Ricardo says:

    >> individuals are allowed to withdraw a maximum of 100,000 yuan ($15,400) a year from their Chinese bank accounts while overseas, in total, spread over however many separate bank accounts or ATM cards they may have. Until then, they could withdraw 100,000 yuan per card. <<

    And that would give a clue to why the housing markets in places like Sydney, Auckland etc have cooled or are cooling down because of the Chinese ability to get more of their money into overseas investments.

    • Ricardo says:

      I should have added: “Chinese ability to get more of their money into overseas investments is ending”.
      Whilst teaching in Thailand I met a teacher from England who had taught English language in China. He told me that money couldn’t be taken out of China (maybe he meant it applied to foreigners) but because he was working in a city near the border to Hong Kong he was able to get across the border to deposit his money in Hong Kong banks and then be able to take it out of the country. Same also applies in Vietnam where Filipino teachers found they couldn’t send money out of Vietnam and their salaries had to be spent in Vietnam only.
      I wonder how footballers such as Tevez who was on 1.1 million Singapore Dollars PER WEEK but paid in Yuan was able to get his money out of China ?

      • Maximus Minimus says:

        The fact that retired soccer players can extract outrageous salaries in China is proof that the bubble has found every nook and cranny on the planet. While there is no evidence that elderly, or middle aged Chinese have warmed up to soccer, there is evidence that East Asian gambling habits have infected the sport. One more reason to give it a pass.

  9. walter map says:

    Ed: “The U.S. apparently spends north of $800B per year on the military. and roughly $1000B on social security and $1000B on healthcare . . . If the pols wanted to do future Americans a favor for a change, they’d rein all three of those . . .”

    1) General Butler has long since informed us that the military is a racket, largely a device evolved to enrich the wealthy by massacring brown people. The US spends 2/3 of it’s discretionary budget on the military. The usual figures quoted are always way low.

    2) Social Security is a trust fund, essentially a transfer system between citizens, and is not spending on government operations. SS is not the problem.

    3) Health care costs are double what they should be because the government has been corrupted into enabling the system to become another racket. It’s an international disgrace.

    4) Interest on the national debt is already 1.5% of GDP and is crowding out spending for productive purposes, and expected to go higher with every upward ratcheting of rates.

    5) The entire US economy is based on fraud. Good luck trying to fix it. I’d give long odds that it cannot be done.

    Tax the rich. Jail the banksters. Then we’ll talk.

    • Raymond Rogers says:

      Its always tax the rich with you, as if there are no differences in the amount of work and risks taken amongst people who have wealth.

      If you don’t like what you don’t have, provide a service or a product somebody wants.

      • Nicko2 says:

        Earn enough wealth and you’ll discover this truism…after a certain point one simply doesn’t need to pay taxes any more. This is even more true in a globalized sense, where entire industries cater to wealth with the single goal of legal tax avoidance. Simply put, if you’re paying taxes, you aren’t wealthy enough. Governments like China are quickly waking up to this fact and cracking down hard. Of course, many hundreds of billions will continue slipping through the cracks.

        • Kent says:

          True. The rich don’t have income. Corporations have income, on which they spend very little on taxes relative to that income. The rich have access to money in off-shore accounts which they spend. How that money got into those off-shore is, well, hard to know.

          As a nation, we prefer to tax income, which is what wage earners receive, and those who can’t afford attorneys with the right kind of knowledge.

        • d says:

          “As a nation, we prefer to tax income, which is what wage earners receive,”

          Wages and salaries are soft target for tax collectors who can force employers to collect it at source Weekly/Monthly and remit it to the revenue authorities. All at the employers expense.\

          Just like sales taxes the law sates the seller must collect for, and remit to, the tax authority all at the Sellers expense.

      • Bobber says:

        There’s no denying that tax rates on corporate income and higher earners and investors has dropped 30-50% since Reagan. This has contributed to wealth disparity, which dampens demand reduces reinvestment in the economy.

        Is it fair to give the top 1% a 30-50% tax cut while everybody else gets zero tax cut? On the fairness argument, the top 1% has no position whatsoever.

      • IdahoPotato says:

        I aim to get my ordinary income down to zero so that my spouse and I can pocket 75K in dividends every year tax free.

        This is not really risky – getting dividends from stocks, utilities and REITs – while you never plan to sell. It’s just that the system values my “work” – sitting on my hiney and collecting capital gains – more than people who go out and work hard every day to create and do productive things.

        It’s outrageous.

      • walter map says:

        “Its always tax the rich with you, as if there are no differences in the amount of work and risks taken amongst people who have wealth.”

        People who have wealth risk very little, which is why they can afford to take risks.

        “If you don’t like what you don’t have, provide a service or a product somebody wants.”

        Or don’t want, but can be weaseled into buying anyway with money they don’t have.

        It’s those darn barriers to entry, y’know? Nearly all new ventures fail, which is why very few people will ever be successful entrepreneurs. They can’t afford the expected losses. The rich can, and can avail themselves of every dubious resource possible, and can knock down any upstarts besides.

        Your position is untenable.

        • RAYMOND ROGERS says:

          You have no idea how many people lose it all when they take these risks. Some are successful for short periods of time, pay out the rear in taxes when times are good and take nothing when they lose it all.

          Nearly 4/5th of all millionaires are first generation. This does not fit your narrative of those who have money, have always had money.

        • Thomas R Kauser says:

          Brokers haven’t taken a single days loss in 10 years!
          10 years ago to the day reserves on loan to the Fed from the Banks was 10 billion now its close to 2 TRILLON dollars? Each time short interest rates are increased money comes directly from my pocket and on to the banks balance sheet….. Back to LA miserables on YouTube!

    • Justme says:

      Go Walter!!!

  10. Bet says:

    I have been to the Lowu mall in schenzen about seven years ago. It took just a few hours to see how they have embraced capitalism with a unbridled fevered fervor
    And they all worked together all the stall keepers, when Americans came in the mall they all talked with cellphones to keep track of us. All profited ,all shared , all for the sale. I knew then and said so. The Chinese will outwork out hustle the fat spoiled Americans. I still have clothing patterns on file there. One email and I get a custom European fit long coat in Australian wool for 25 dollars and made overnight. Unreal. Still have that coat going strong….

  11. d says:

    “I think there’s a basic assumption in the English-speaking commentariat that because China is a command economy it must fail.”

    Command economies fail due to mismanagement, Just like any other economy. Not due to them being command economies.

    The problem with command economies, is they do not trade fairly with market economies. china has no intention of trading fairly with the west until it has no other options

    .It can COMMAND away its debt problems, until the day arrives, that it cant, that day is still some time in the future.

    • IdahoPotato says:

      The West commands their own economies by going to war with the East. To steal oil (Iraq) and/or to tell others how to live their lives (Vietnam).

      • d says:

        “To steal oil (Iraq) and/or to tell others how to live their lives (Vietnam).”

        If you believe fairy stories like those, that’s your problem.

        You are Obviously way beyond help.

  12. scott says:

    A strong Yuan also hurts China’s manufacturing becuse it takes more dollars to buy that thing. So buyers either pay the increase and pass it on to the consumer or look to other countries. So The yuan its a double edge sword for China on one hand, or at least until they can fill local manufacturing with local order; which has increased over the years. I once met a shoe factory owner in China how said why make a 10,000 pair order with high quality standards when I can make a 10,000,000 pair order for the local market with lower qc standards (lower marger but makes up for it in volume). Also this past year marked an un precedent number of factory inspections by the government for environmental waste and safety regulations. its hard to find an anodizer or electroplater in the Zhejiang region at the moment (many factories have closed because of this). So the cost of goods have risen because of, this, wage increases and a strong yuan. And like all governments, they know their people need jobs so they have to ballance all this. And now comes a bubble in AI and robotics (foxcon looking at replacing 200k workers with robots). Side note. My 4 year old has a good dose of aggression towards the mini robot we got him; which makes me smile. Question. If robots start taking jobs, who do we blame, the Chinese?

  13. KiwiinCanada says:

    Assuming China’s trade surplus remains the same, than draw downs on FX reserves must be occurring on the Capital account. That reserves are increasing would suggest that the pressure for capital flight has declined, perhaps because of the declining value of the US dollar in 2017, or increased capital controls or because the investment opportunities in China have improved. The substantial increases in residential real estate values in China over the last year would suggest this sector must be absorbing more of the gigantic accumulated savings pool which is at least 10 times FX reserves.

    This pool of savings, trapped if you will, in the country and unable to diversify out because of capital controls and limited FX reserves have been forced in the past into various Savings vehicles where the actual return has been somewhat questionable. The many cities in China that have witnessed substantial real estate gains in the recent past suggest that this area may be providing some outlet for these savings.

    This obviously is theory but there is some evidence that the Chinese growth model which relied heavily on capital expenditures and exports with consumption being quite low is rebalancing. As a percentage of GDP savings and cap ex seem to be declining, exports are declining and consumption as well as real estate investments are increasing. These trends are likely to decrease capital flight tendencies and draw downs of FX reserves.

  14. raxadian says:

    I do not think China control is a bad thing, they cannot get away with being inflation and debr country like the US has bern ge4 away so far.

  15. Wendy says:

    China has foreign exchange reserves, no doubt, but to believe their reports is foolish, and to use their “ data” to make predictions of their demise is doubly foolish. Let’s just agree that China has lots of US bonds, and is free to discretely diversify into other assets behind our backs, and feed us their “official” numbers to keep us placated. We my think they are fools, but in a crisis, we will be found to be bigger fools.

  16. Mike R. says:

    All the world’s major economies are “command economies” now.

    • Kent says:

      Agreed. China’s top Communist Party cadres are all from very wealthy families that made out after Deng-Zhou Peng declared “it is glorious to get rich”. We have the same in America, ours just hides behind a carefully crafted and controlled democratic republic.

      • walter map says:

        “China’s top Communist Party cadres are all from very wealthy families”

        Those darn commies. They’re actually capitalists, camoflaged as leftists.


        • d says:

          “Those darn commies. They’re actually capitalists, camoflaged as leftists. ”

          NO They are just oppressive dictator oligarchs, claiming to be acting in the interest of the peopel.

          They make the old mandarins look like angels.

          Communism is for the masses and only the masses.

        • Thomas R Kauser says:

          Best shirt in Zimbabwe

  17. michael Engel says:

    Since Jan 2017 TLT up from 114 to 128.
    China love the UST.

  18. Tom Kauser says:

    I think we have explored this question sufficiently? It its clear that the new year will see the continuation of wealth being dragged in from east to the CITY? Pound stays down against the dollar (britexit gift keeping its giving) while Japanese housewife borrows yen to buy dollar? Yuan stays higher than United. Campfire and body odor obamatown has a new mayor! Drive by took a chuck out the front door almost got run down in the parking lot boomwine bottles ashtrays being discarded freshly made 10 year olds screaming top of lungs knocking down product “this is the worst birthday ever”! His dad must have missed christmas deployed, again?

  19. Ed spinks says:

    Chinese junk goods!
    Like Japanese junk goods before them.
    One day I had to pay thousands ABOVE invoice to own a Honda.

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