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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

#111

Post by bakuninsbart »

FreshStart wrote: post #55

The problem is that China does not want to become the US, they want to become colonial great Britain or France. The goal is classic mercantilism-all raw material have to go through them to become a product. It's barely disgused Manchester allover. The US by comparison has been quite dedicated to free trade. They abandoned there own production base, imported more culture then they exported and overall been quite frien…

This is just false, there is little evidence to suggest anything of the kind. China wants to secure its imperial borders (Tibet, Xinjiang) as a show of national pride, and it wants to ensure the security of its people by making sure the islands in front of the mainland can't be used to stage an attack and the SCS cannot be blockaded by the US. American senators and generals proudly proclaim they have the power to starve the Chinese with a blockade in the SCS or block access to the Pacific - it is only natural for China to not want to be in that situation.

None of the actions China resembles European colonialism.

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

#112

Post by szundi »

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…

I would rather simply point out that they are after our way of living.

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

#113

Post by frankreyes »

henry2023 wrote: post #89
frankreyes wrote: post #59

Earlier quoted context omitted.

Except that they're selling cash. China doesn't sell you USD, they keep the USD in their safe and give you their own currency in exchange. That hidden money is overly leveraged, ie debt, and you'll never know if tomorrow you'll get your original value back. China is the most indebted country in history. How do you know that for each $1 hiding in accounting magic is not being resold twice? We don't, because of what th…

>>> China is the most indebted country in history. Last time I checked China was ~23T in debt vs USA’s ~32T. They also have a population almost 5 times larger.

That's external debt. I'm talking about total private credit.

Private credit is what brought the 2008 crisis in the USA. The public debt wasn't the problem before, but it was after: using public debt to pay private debt from banks.

And that's what the article is also talking about: China keeps the USD in their own banks and prints CNY to spend, but how many USD for how many CNY is not clear.

It's pretty much a Ponzi. As long as people don't ask their USD back from their CNY it's all good. Good luck when people starts asking USD from China.

China TOTAL private credit in CNY is available here:

https://zeihan.com/wp-content/uploads/2022/05/total-private-...

You can also see how much money they printed here:

https://zeihan.com/wp-content/uploads/2022/04/global-money-s...

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

#114

Post by paganel »

_s wrote: post #109
paganel wrote: post #97

Earlier quoted context omitted.

You’re saying that building roads and bridges is not beneficial to countries which deeply lack roads and bridges?

Not when they are built by Chinese companies, using Chinese sourced labour and supplies, and then the locals are taxed / billed to use them which many can't afford to begin with. Not to mention the governments now owing that loan money plus interest, none of which really went into the local economy. Not arguing against China, nor infrastructure projects, but B&R initiative is very China-centric, with a lot caveats th…

So what do you suggest as a better alternative?

The West has tried and failed with countless “solutions” for more than six decades now, in many places making the situation worse compared to the start of the decolonization process.

Also, road taxes is a measure that it is also heavily promoted by the European Commission in the Eastern European countries where “its” money is now helping build bridges and highways (I live on such an Eastern European country).

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

#115

Post by [deleted] »

paganel wrote: post #97
NicoJuicy wrote: post #87

Earlier quoted context omitted.

> These currency reserves largely represent loans China issued abroad, which have been paid off (or are in the process of being served). I think you missed a crisis in Africa. Those loans can hardly be paid off, the interest rates are too high and the borrowed loans Kuch for infrastructure projects aren't leading to any improvements / revenue. If so, show me which have a net benefit for the country where loans are us…

You’re saying that building roads and bridges is not beneficial to countries which deeply lack roads and bridges?

[deleted]

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

#116

Post by spaceman_2020 »

tgsovlerkhgsel wrote: post #102
spaceman_2020 wrote: post #84

Earlier quoted context omitted.

If we’re going to go into history and massacring your own people, then America isn’t entirely the example you want to emulate. Remember the whole Native American massacre thing that America has convniently forgotten about.

I think there is a bit of a difference whether the massacre happened in the 1860 or 1960, and whether the last larger massacre of protestors happened in 1970 and is generally, officially and publicly recognized as a bad thing with memorials etc. [1], or whether it happened in 1989, involved tanks and hundreds to thousands of deaths, and people are persecuted for even mentioning it. [1] https://en.wikipedia.org/wiki/K…

Well, when Mao was doing his great leaps, American citizens had to literally had to march in the streets for basic civil rights. Again, not exactly a clean record.

Glass houses and stones and all that.

Point is, in the living memory of most people on the earth, i.e. people below 30, the only wars waged against non-neighbors have been Americans invading Iraq and Afghanistan. So from the place most non-Americans stand, America is a belligerent and irresponsible power.

What someone did in 1960 is important and can't be glazed over, but as a 30 year old, it's hard to understand and even harder to contextualize. But Iraq and Afghanistan is fresh enough in everyone's memory, to the point that I remember the headlines about the fake WMDs and the numbers about civilian deaths.

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

#117

Post by spaceman_2020 »

ethbr0 wrote: post #92
spaceman_2020 wrote: post #73

Earlier quoted context omitted.

> Economically, they're an adversary; they undercut western manufacturing and all our manufacturing went there. Wow, you make it sound like it was some devious Chinese plan where they intentionally made their people work for American manufacturers and lured them in with bribes. The reality was that American corporations willingly went over to China because number must go up and paying their own people living factory…

> America did it to itself. Corporations outsourced manufacturing to China, because American corporations are independent from the US government and profit-motivated.

If a corporation is HQed in and operated out of America, and diverts the bulk of its profits to American citizens, it is reasonable to say that "America did it to itself".

American citizens could have voted with their wallets, and they could have voted at the booths to elect governments that would regulate the flow of American jobs overseas. But they didn't, and so here we are.

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

#118

Post by cthalupa »

frankreyes wrote: post #113
henry2023 wrote: post #89

Earlier quoted context omitted.

>>> China is the most indebted country in history. Last time I checked China was ~23T in debt vs USA’s ~32T. They also have a population almost 5 times larger.

That's external debt. I'm talking about total private credit. Private credit is what brought the 2008 crisis in the USA. The public debt wasn't the problem before, but it was after: using public debt to pay private debt from banks. And that's what the article is also talking about: China keeps the USD in their own banks and prints CNY to spend, but how many USD for how many CNY is not clear. It's pretty much a Ponzi.…

While not explicitly arguing against this point, I would note that these graphs are from Peter Zeihan, who has explicit financial incentive in convincing people China is on the road to economic ruin. He makes his living as geopolitical analyst and has been predicting the imminent downfall of China since decades ago at Stratfor - if people come to disbelieve his predictions have value, he loses money.

Which doesn't mean he's wrong, but I do think it is important to consider incentives whenever someone is attempting to convince you of something.

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

#119

Post by eunos »

csomar wrote: post #105
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…

> The US has about 4T of foreign exchange reserves Source? Wikipedia puts it at $250bn. The US has liquidated most of its reserves in recent years.

Refers to gold reserve likely

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

#120

Post by frankreyes »

cthalupa wrote: post #118
frankreyes wrote: post #113

Earlier quoted context omitted.

That's external debt. I'm talking about total private credit. Private credit is what brought the 2008 crisis in the USA. The public debt wasn't the problem before, but it was after: using public debt to pay private debt from banks. And that's what the article is also talking about: China keeps the USD in their own banks and prints CNY to spend, but how many USD for how many CNY is not clear. It's pretty much a Ponzi.…

While not explicitly arguing against this point, I would note that these graphs are from Peter Zeihan, who has explicit financial incentive in convincing people China is on the road to economic ruin. He makes his living as geopolitical analyst and has been predicting the imminent downfall of China since decades ago at Stratfor - if people come to disbelieve his predictions have value, he loses money. Which doesn't me…

Zeihan is just showing us the data.

Do you have any data to back up any counter argument?

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