China: The Triple Trillionaire

This tongue-in-cheek commentary in ‘Economist’ on the size of China’s FX Reserves gets its message across eventually. It is a delightful irony (not-so-delightful, depending on the eye of the beholder) that even as China is trying to internationalize the use of yuan and also make its currency one of the global reserve currencies, its interests lie in preserving the value of its main and status-quo rival: US dollar! 

I expect this piece in Wall Street Journal (subscription may be required) to be read and circulated widely. The human angle in this story is strong. It is about the political and policy headwinds that the People’s Bank of China faces in trying to cool an overheated economy. People’s Bank of China – the official central bank of the country – is, at best, a non-voting member and at worst, a mere passive spectator at the State Council meetings that determine monetary policy.

The message of the previous article is reinforced by a news story that Bloomberg/Business Week carried on China’s foreign exchange reserves. The PBoc Governor calls the level of foreign exchange reserves (more than three trillion US dollars worth) China is carrying as beyond reasonable levels.

There is a smell of policy discord in the Middle Kingdom.

This post originally appeared at The Gold Standard and is reproduced here with permission.