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How did China even managed to run out of foreign cash? This is huge news for me. They were always swimming in export profits / probably still are / travel limi
by thriftwy 4y ago
How did China even managed to run out of foreign cash?
This is huge news for me. They were always swimming in export profits / probably still are / travel limits since COVID means that obvious leak of travelling and spending abroad is plugged.
How could they run out of cash?
- unity1001 4y agoThey didnt. He is just making it up. China has been dumping US treasuries recently. Maybe he is confusing that with China's foreign reserves drying up. ... In any case, Yuan is the new foreign currency. And China has, well, all of it...
- reaperman 4y agoFor clarity, China de-prioritizes T-bills in favor of US Federal agency bonds which are nearly the same risk but slightly higher returns/interest rates. They currently hold $1.2 trillion in federal USD Fannie Mae/Freddie Mac/SBA/FHA bonds. Higher reward, similar risk, still perfectly reasonable USD FX reserves.
- typon 4y agoThe last point is all that matters. It will be painful and take a while for Americans to come to grips with it, or we will all die in an apocalypse when they can't accept it.
- LeFantome 4y agoRemains to be seen. It is not clear that China has the rule of law that the world needs in a foreign currency. Even the US has been pushing their luck on this front but they are better than China. Economically, demographics are insanely against China and it is not clear that immigration is a viable way for them to close that gap. Finally, their unique political system has not been tested during a period of low growth. It is not clear they have the political stability to be a reserve currency. Again, the US has been pushing their luck.
- unity1001 4y ago[flagged]