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Thank you. If it's for strategic autonomy, it's a bad trade. China needs domestic consumption like you mention, to absorb their supply / keep people working. We

Thank you. If it's for strategic autonomy, it's a bad trade. China needs domestic consumption like you mention, to absorb their supply / keep people working. Weakening USD would make Chinese exports more expensive, esp. if they convert it to Yuan. Meanwhile there's a property crisis and they can stimulate demand, including for strategic autonomy. One devious possibility is just giving it to Russia. Repatriating it as Yuan to stimulate doesn't make sense to me.

7777777phil 11mo ago
The property crisis and domestic consumption issues are real constraints, but I think the framework's point is that the calculus has shifted even if the alternatives aren't great. China's treasury holdings peaked around $1.3 trillion in 2013 and are now closer to $750-800 billion. You're right that repatriating as yuan for stimulus doesn't solve the structural issues. But Pozsar suggests the alternative isn't necessarily converting back to yuan, it's using dollar reserves to lock in commodity supply agreements or funding infrastructure that creates yuan-denominated trade flows. Strategic rather than economically optimal, but reduces exposure to assets that could be frozen. Your "giving it to Russia" point is interesting because it addresses multiple objectives simultaneously: supporting an ally while converting financial assets into physical resources and geopolitical relationships. Whether that tradeoff makes economic sense long-term idk.