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I think the implication is that the global market makes pricing and reliability guarantees based on the public number, not the actual number. In other words: by

I think the implication is that the global market makes pricing and reliability guarantees based on the public number, not the actual number. In other words: by secretly hoarding foreign reserves, China is signaling something that the markets might not have priced in already. (This is my interpretation; not an endorsement in any particular direction.)

ergocoder 3y ago
But what is the point of making it a secret? It would make foreigners' companies have a harder time because the public info is wrong... But this also makes Chinese companies have a harder time as well. Not to mention, it erodes trusts for every entity that depends or trades with China...
- woodruffw 3y ago
  I have no idea! Speculating baselessly: a country might choose to hold excess foreign reserves without publicly disclaiming them when it lacks confidence in its own currency or economy, or if it foresees global market upsets (e.g. wars) that would make their local currency less desirable for international trade. I agree with your point about eroding trust: it’s hard to think of a reason to do this that would be worth it.
- Dalewyn 3y ago
  >But what is the point of making it a secret? It makes the many exaggerated claims of Chinese economic demise that much more exaggerated and likely false, it leaves the rest of the world (read: their enemies) more complacent and more vulnerable to Chinese ambitions. If the claim being presented here is true, it doesn't really surprise me: I've been hearing for the better part of the past three decades that China's economy (and consequently the country) was on the verge of imploding. It is now the year 2023 and China still hasn't imploded and is seemingly on track to win the new cold war against the west. Does China have $3 trillion dollars of secret "fuck you" money? At this point I would be more surprised if they didn't.
  - gumby 3y ago
    > Does China have $3 trillion dollars of secret "fuck you" money? I don’t think that’s a useful way to think of foreign reserves.
gumby 3y ago
Are they "secretly hoarding foreign reserves" or could they simply not be good at getting statistics from anything but the central government? The latter would be pretty plausible to me; China is pretty terrible at collecting statistics (quite apart from the distortion imposed by state reporting).
- woodruffw 3y ago
  That’s plausible; at the same time, it’s (notionally) in all parties’ interests to be transparent about foreign reserves. That should translate into a strong incentive to handle their own numbers correctly, but who knows.

ergocoder 3y ago

But what is the point of making it a secret? It would make foreigners' companies have a harder time because the public info is wrong... But this also makes Chinese companies have a harder time as well. Not to mention, it erodes trusts for every entity that depends or trades with China...

woodruffw 3y ago
I have no idea! Speculating baselessly: a country might choose to hold excess foreign reserves without publicly disclaiming them when it lacks confidence in its own currency or economy, or if it foresees global market upsets (e.g. wars) that would make their local currency less desirable for international trade. I agree with your point about eroding trust: it’s hard to think of a reason to do this that would be worth it.
Dalewyn 3y ago
>But what is the point of making it a secret? It makes the many exaggerated claims of Chinese economic demise that much more exaggerated and likely false, it leaves the rest of the world (read: their enemies) more complacent and more vulnerable to Chinese ambitions. If the claim being presented here is true, it doesn't really surprise me: I've been hearing for the better part of the past three decades that China's economy (and consequently the country) was on the verge of imploding. It is now the year 2023 and China still hasn't imploded and is seemingly on track to win the new cold war against the west. Does China have $3 trillion dollars of secret "fuck you" money? At this point I would be more surprised if they didn't.
- gumby 3y ago
  > Does China have $3 trillion dollars of secret "fuck you" money? I don’t think that’s a useful way to think of foreign reserves.

gumby 3y ago

Are they "secretly hoarding foreign reserves" or could they simply not be good at getting statistics from anything but the central government? The latter would be pretty plausible to me; China is pretty terrible at collecting statistics (quite apart from the distortion imposed by state reporting).

woodruffw 3y ago
That’s plausible; at the same time, it’s (notionally) in all parties’ interests to be transparent about foreign reserves. That should translate into a strong incentive to handle their own numbers correctly, but who knows.