China's foreign exchange reserves near record $4 trillion

[Chinese-Dragon]

Bad news:

Financial Times - China’s foreign exchange reserves near record $4tn

China’s foreign exchange reserves rose to just shy of $4tn in the first quarter of 2014, roughly the same as its entire equity market and confirming the hand of the central bank in the recent weakening of the renminbi.

Official data released on Tuesday showed China’s FX reserves jumped $129bn in the first three months of the year, to hit an all-time high of $3.95tn. The ramp up in reserves coincided with a rapid fall in the renminbi against the dollar, which many had attributed to deliberate action by the People’s Bank of China.

However, most analysts believe the recent move to weaken the renminbi was designed to ward off speculation by companies and investors who had come to see the currency as a one-way bet. It came just before China announced a widening of the renminbi’s daily trading band. Many still believe that the renminbi will return to its upward path.

“The FX reserve figures confirmed the weakening renminbi is because of [the] PBoC’s intensive intervention,” wrote Liu Li-Gang, ANZ analyst. “Since such unsterilised interventions cannot last and could be self-defeating as shown by the rapidly increasing FX reserves, the renminbi is still under heavy pressure to appreciate.”

Shuang Ding, economist at Citi, said China’s foreign exchange reserves may have jumped as much as $40bn in March, in spite of a trade surplus of $7.7bn, an indication of heavy intervention in the currency markets.


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This is getting silly. We should be diverting more of our reserves into the CIC branch of our currency reserves, i.e. the China Investment Corporation. Which is responsible for investing in real assets across the world, such as "land" in Ireland/Kazakhstan/Ukraine, resources all over Africa, infrastructure in Britain, ports in Greece, etc.

That will give us a better return on our money, and give us more influence in the global economy as well. Real assets are better than treasury bonds any day.

 

[itaskol]

not only foreign exchange reserver grows very large

and also the chinese banks

in the forbs world top 2000 list
the top three all chinese banks

The World’s Biggest Public Companies List - Forbes

 

[saikumar]

china is destined to be a super power whatever others might say

 

[naveen mishra]

 

[Raphael]

The govt. still believes that the way to further economic prosperity is to buy American treasury bonds, increase American purchasing power, and thus stimulate exports. This kind of monetary policy is extremely misguided, like betting on the wrong horse. The American congress regularly threatens to default on its debt, and if they make good on their threats, our financial reserves will become worthless overnight, nothing more than scraps of green paper.

 

[Chinese-Dragon]

The govt. still believes that the way to further economic prosperity is to buy American treasury bonds, increase American purchasing power, and thus stimulate exports. This kind of monetary policy is extremely misguided, like betting on the wrong horse. The American congress regularly threatens to default on its debt, and if they make good on their threats, our financial reserves will become worthless overnight, nothing more than scraps of green paper.

Exactly.

To have more buying power, we need a stronger currency.

Why is America's nominal GDP so high? They don't produce as much as China. The reason is because the USD is so strong, as a result of it being the world's reserve currency.

And by loaning them money, we are indirectly contributing to their ability to maintain the global hegemony of the dollar, which weakens our own position.

It's a difficult situation to be sure. Plus, there is no guarantee America will even be able to pay off their debts, since their debts are beyond enormous.

If I remember correctly, US treasury bonds make up around 1/3 of China's total currency reserves. That will be a huge hit to take if they suddenly go into an economic black hole, which is certainly a possibility considering the USA's economic growth is currently only 0.1%.

 

[DESERT FIGHTER]

@Chinese Dragon can you buy me a G36 Merc on soft loans:

 

[Beast]

Exactly.

To have more buying power, we need a stronger currency.

Why is America's nominal GDP so high? They don't produce as much as China. The reason is because the USD is so strong, as a result of it being the world's reserve currency.

And by loaning them money, we are indirectly contributing to their ability to maintain the global hegemony of the dollar, which weakens our own position.

It's a difficult situation to be sure. Plus, there is no guarantee America will even be able to pay off their debts, since their debts are beyond enormous.

If I remember correctly, US treasury bonds make up around 1/3 of China's total currency reserves. That will be a huge hit to take if they suddenly go into an economic black hole, which is certainly a possibility considering the USA's economic growth is currently only 0.1%.

This is the very reason despite of the so called pivotal asia by the obama is futile. US dare not touch China and avoid an outright military confrontation with China. The US can bark whatever they want or do whatever small action like planting troops in darwin, build up military bases in Philippines but US federal government is still sane and know that you do not beat the hands that feed you.

You see China guess correctly by directly sending an oil rig into a disputed area and provoke no military confrontation with US.

 

[qwerrty]

. The American congress regularly threatens to default on its debt, and if they make good on their threats, our financial reserves will become worthless overnight, nothing more than scraps of green paper.

true, but uncle won't dare, unless he wants to have terminal butt cancer

 

[Beast]

true, but uncle won't dare, unless he wants to have terminal butt cancer

Bingo.The top level people of US know China is the one feeding her. All the anti-China posture is just for domestic and neo con comsumption in US. So as to pacify US hard liner.

US will never dare to fight China unless China threaten US by attacking Guam or Pearl harbour unprovoke.

US is a country build on capitalism so China used capitalism to beat her back on her own games.

 

[Chinese-Dragon]

US is a country build on capitalism so China used capitalism to beat her back on her own games.

Exactly.

America had a chance to stop us, maybe 10 years ago. But now it's too late, their budgets are sourced from Chinese loans. They can't sanction us like they are trying to do to Russia, there is too much economic interdependence now.

What we need to do is hold off America until we reach a decent level of power, say in 1-2 decades time. We need to buy time to finish our current phase of economic development, and we are succeeding in that goal. No one is willing to physically intervene to stop our enormous economic expansion.

 

[Hamartia Antidote]

China own 8%
Who Holds Our Debt?

 

[sherin616]

Us is reversing its debt by bringing back troops from afganisthan and decrasing weapon producing and stop making tomhawk
The us will be in right track in near future

 

[Pakistanisage]

Wow, that is truly amazing....

Since the USA's total GDP I 16 Trillion Dollars, China can actually buy out 25% of the US in a Cash Transaction. May be the whole West Coast ?

 

[Beast]

So China is essentially held hostage by US treasury department.

The day US decides to default or even to devalue, millions of chinese working hard in apple factories will see their wealth go down the drain.



Why don't you go live in China dude, I am sure they would be willing to provide you with as generous social security as US.

That will not happen. China can retaliate such nonsense by nationalise all US owned company in China. If its so easy to blackmail China, they will have done it long time ago.