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China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

bloomberg.com

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Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#21

Post by [deleted] »

woodruffw wrote: post #17
AngryData wrote: post #15

Holding on to cash reserves seems like a smart move for any government. People will applaud private companies and investors holding decent chunks of cash so they can invest into economic dips and crashes, and we have watched many countries borrow huge amounts to alleviate economic downturns, but a government holding money to either invest into or diminish an economic downturn is suppose to be bad? If the opposite hap…

The article is about undisclosed foreign reserves, not any foreign reserves. There’s general consensus among economists and political scientists that maintaining foreign reserves is both good for countries and for global peace, but that really only works if everybody knows you’re doing it[1]. In other words: it’s easier to think of untoward reasons for hiding foreign reserves than honest ones. That’s why there’s a st…

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Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#22

Post by superchroma »

veqq wrote: post #13

These currency reserves largely represent loans China issued abroad, which have been paid off (or are in the process of being served). Similar to Eurodollars in the past yielding outsized interest rates, increasing demand and thus dollar outflows, this shows a (perhaps?) unrecognized accumulation in China, which may very well either allow them to essentially print their own dollars or mean that they already have been…

I mean it's the gigantic elephant in the room. The reported narratives have aligned over the years as if they were our enemy.

Here are some:

Economically, they're an adversary; they undercut western manufacturing and all our manufacturing went there. They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nations with predatory loans for infrastructure. They trade with our other enemies and flaunt sanctions, etc, etc.

Ethically, they're our adversary: They use (basically) slave labor, unethical materials (e.g. live plucking), environmentally damaging materials (e.g. banned CFCs), they happily pollute the earth as if tomorrow isn't a concern. They are scraping the ocean clean to feed their people. They oppress their citizens, they operate a crude faux-democracy, they have embarked on an extremely damaging zero covid approach long after it ceased to be relevant to save face for creating it, etc, etc.

Politically, they're our adversary, insulting foreign politicians, trying to annexe land and sea that definitively isn't theirs (Tibet, "South China" Sea), engaging in brinksmanship to force the issue, etc.

These are all things from media stories that I can think of from the top of my head. Not exactly representation as a best friend.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#23

Post by gumby »

woodruffw wrote: post #10
gumby wrote: post #7

and...? The article doesn't say how it's a big deal (or not). Looking at the list oof countries' forex reserves, tiny Switzerland has almost a trillion. Generally this is a sign that they export more than they import so are stuck with a bunch of foreign exchange. Of course they have to buy stuff with it: oil, other commodities, or, you know, foreign debt. China's 3T would be 10% of the US federal debt, or much smalle…

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.)

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).

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#24

Post by bugglebeetle »

superchroma wrote: post #22
veqq wrote: post #13

These currency reserves largely represent loans China issued abroad, which have been paid off (or are in the process of being served). Similar to Eurodollars in the past yielding outsized interest rates, increasing demand and thus dollar outflows, this shows a (perhaps?) unrecognized accumulation in China, which may very well either allow them to essentially print their own dollars or mean that they already have been…

I mean it's the gigantic elephant in the room. The reported narratives have aligned over the years as if they were our enemy. Here are some: Economically, they're an adversary; they undercut western manufacturing and all our manufacturing went there. They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nation…

> They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nations with predatory loans for infrastructure. They trade with our other enemies and flaunt sanctions, etc, etc.

Aside from the money standard and zero COVID bits, every part of this is true of the US. This conflict just boils down to “the hegemon doesn’t want any competition.”

> they undercut western manufacturing and all our manufacturing went there.

America’s oligarchs did this to the country. China just leveraged their short-sightedness and greed to the country’s own advantage.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#25

Post by woodruffw »

gumby wrote: post #23
woodruffw wrote: post #10

Earlier quoted context omitted.

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.)

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).

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.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#26

Post by Dalewyn »

ergocoder wrote: post #16
woodruffw wrote: post #10

Earlier quoted context omitted.

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.)

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...

>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.

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#27

Post by glompers »

superchroma wrote: post #22
veqq wrote: post #13

These currency reserves largely represent loans China issued abroad, which have been paid off (or are in the process of being served). Similar to Eurodollars in the past yielding outsized interest rates, increasing demand and thus dollar outflows, this shows a (perhaps?) unrecognized accumulation in China, which may very well either allow them to essentially print their own dollars or mean that they already have been…

I mean it's the gigantic elephant in the room. The reported narratives have aligned over the years as if they were our enemy. Here are some: Economically, they're an adversary; they undercut western manufacturing and all our manufacturing went there. They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nation…

The problem is that a single-party propagandist republic is effectively a separate type of government than a representative republic and makes it harder to distinguish the will of the population.

The policies could be hidden from the vast majority of informed public opinion in a way Western conspiracists or whataboutists alike can only dream is really correspondent or directly analogous to mainstream media manipulation.

It can still be true that China’s no one’s enemy except that the Party is everyone’s enemy (while the Chinese population will be the last ones to realize it).

Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#28

Post by glompers »

bugglebeetle wrote: post #24
superchroma wrote: post #22

Earlier quoted context omitted.

I mean it's the gigantic elephant in the room. The reported narratives have aligned over the years as if they were our enemy. Here are some: Economically, they're an adversary; they undercut western manufacturing and all our manufacturing went there. They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nation…

> They manipulate their currency. They interfere with foreign owned businesses. They steal IP. They're seeking to upset the global money standard. They entrap other nations with predatory loans for infrastructure. They trade with our other enemies and flaunt sanctions, etc, etc. Aside from the money standard and zero COVID bits, every part of this is true of the US. This conflict just boils down to “the hegemon doesn…

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Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#29

Post by gagged_s_poster »

isykt wrote: post #8
vkou wrote: post #2

So what? TFA keeps repeating that this is bad, but fails to explain why. Is countries actually having money a problem now?

Which country’s values do you prefer influencing the developing world: China’s, or the United States’?

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Re: China Has $3T of ‘Hidden’ Currency Reserves, Setser Says

#30

Post by gagged_s_poster »

isykt wrote: post #20
AngryData wrote: post #12

Earlier quoted context omitted.

Neither, and I fail to see the difference between them. Neither country would do such a thing with altruistic goals and both have proven they shouldn't be trusted. We have already seen how badly the US fucks up other place's economies and governments with their meddling.

You fail to see a difference between a country run by an autocratic cult of personality and a country run by a democracy? That’s troubling. The US commitment to human rights is flawed, but it’s nothing compared to the dystopia that is China. Values matter.

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