The mystery deepens. China’s June reserve growth is surprisingly low.

China just indicated that its reserves reached $1808.8 billion at the end of June. That is obviously a huge sum — it is $126.6b more than China reported at the end of March. But the increase in June was surprisingly small — only $11.9 billion. Moreover, the euro rose in June. After adjusting for valuation […]

Maybe China is a typical creditor after all

Creditors through the ages haven’t liked to take policy advice from debtors. They generally tend to think that borrowers should listen to the advice offered by those lending them money. And they often think debtors fail to pay sufficient attention to the concerns of their creditors when formulating economic policies. Sound familiar? China believes that […]

A tale of two Asias: China, and almost everyone else

Many emerging Asian economies — Korea, India, perhaps some others — are now intervening to keep their currencies up rather than trying to hold them down. The Raphael Minder of the Financial Times reports: South Korean authorities on Tuesday sold as much as $1bn to shore up the won, according to currency traders in Seoul, […]

The London Times’ take on Chinese equity investment abroad

I found the Times’ article (hat tip, SWF Radar) on the China’s plans to invest abroad to be somewhat confusing. The article’s headline claimed “Plans are are afoot to diversify its [China’s] holdings of reserves without causing political rows.” But what are those plans? Well, the CIC “will help [China’s] state-owned companies to expand overseas […]

Yet more evidence relative prices matter

The rising cost of transportation makes goods produced closer to their final market cheaper relative to the goods produced a long ways away. Today’s Wall Street Journal reports that rising transportation costs are having an impact: DESA LLC has decided it makes more sense to produce heaters in Kentucky than in China; Breman Castings Ince […]

Maybe the CIC isn’t motivated entirely by commercial gain …

The CIC claims it wants to be a commercial investor. Gao Xiqing is often quoted to the effect that the CIC “operates on commercial principles” and intends to only take passive stakes. I have always found that those claims sit uncomfortably with the CIC’s current portfolio, which is dominated by stakes in China’s state commercial […]

Is Chinese export growth accelerating once again?

Most of the headlines reporting on China’s May trade data focused on the small y/y fall in China’s trade surplus. Given the rise in the price of oil, China’s surplus should be falling. The surprise is that it isn’t falling more. The real surprise in the May data was the strength of Chinese export growth. […]

Should SAFE be considered a SWF?

SAFE is China’s State Administration of Foreign Exchange. It enforces China’s capital controls — and manages the foreign exchange reserves of China’s central bank. Lately though it hasn’t necessarily been investing in classic central bank reserve assets. Participating in a TPG fund is something an aggressive sovereign fund might do, but not something a traditional […]

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