Hot Money Continuing to Flow Out of China
China's foreign exchange reserve dropped by $25.9 billion in October but increased by $5 billion in November and $61.3 billion in December. These figures are sometimes deceptive, however. Due to factors such as the USD/Euro rate, hot money is, in fact, flowing out of China.
Buying Made-in-China? Pay RMB, Please
China's government cabinet, the State Council, is pushing RMB settlement pilots in the trade between Guangdong and the Yangtze River Delta with Hong Kong and Macao, and between Gaungxi and Yunnan Provinces with ASEAN.
Capital Outflow Could Cause China to Sell US Treasury Bonds
China has long worried about foreign capital withdrawal. A sharp and continuous outflow will not only seriously affect China's financial industry and real economy, but PBoC will also be forced to sell off foreign exchange assets,such as US treasury bonds, in order to meet international settlement demand, which would put deadly heat on the international financial market, especially the US national debt market
More Corporate Bonds: China Adjusts its US Asset Portfolio
Recently there has been a change in the structure of China's purchase of US financial assets. Since July, agency bonds supported by the US government, including Freddie Mac and Fannie Mae (two massive US mortgage lenders) have been sold in four successive months. US shares were sold for three months in a row from June but have been net bought to a small degree in September and October. US government bonds have seen the most significant change. In September and October, China's increase in its holding of US treasury bonds set a record, with short-term Treasury bonds accounting for 91% and 85%, respectively of the total increas
Chinese Government Buys Up Yet More US Debt
China continues to add US Treasury Bonds to its $2 trillion foreign reserve portfolio, since worthy alternative assets in the turbulent world financial market and slumping economy are hard to find. But its new holdings consist more of shorter-term bonds.
China and Neighbors Agree to Settle Trades in their Own Currencies
Despite its closed capital account and the lack of easy exchange of its currency, China is working to set up a trade payment system using RMB, and has signed an agreement on free choice of bilateral trade settlement currency with eight neighboring trading partners.
RMB Depreciation Raises Worries Over Capital Outflow
China's currency, the RMB, dropped to daily limit on both of the first two days, and touched the daily limit on third day of December, to the surprise of the market, which is now in dispute over whether RMB, about the only currency that has maintained a strong position against USD in the second half of the year, is approaching a period of depreciation and whether depreciation will lead to large-scale capital outflow.
What's Up with this RMB Depreciation?
It appears that the RMB is approaching a period of depreciation, and Beijing must be readying itself against what is surely to be a storm of protest from foreign (particularly US) markets and politicians. But it would be worth while to look into the reasons for the possible drop in RMB value. Is this a dark plot by the Chinese government to kick foreign economies when they are down, or what? A perusal of the facts might give some guidance.
US Economist McKinnon: Fix RMB Rate Against USD Ag
Ten years ago China successfully rode out the East Asian financial meltdown with a fixed exchange rate and a surge in government disbursement. Can China use the same method to survive the current financial crisis? A big government stimulus package was announced this weekend, but what about the RMB?
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