Category Economy

Is China afraid of something?
Economy

Is China afraid of something?

China has the strongest trade balance in the world and annually increases its reserves exponentially. But its currency, the yuan, is not a reserve asset and China has to invest a significant part of its surplus in US dollars. It tries to diversify by investing in natural resources in Africa and Latin America, and more recently its interest in gold has increased, but its continued underwriting of US government debt has exposed it to significant exchange rate risk.

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Economy

Is China afraid of something?

China has the strongest trade balance in the world and annually increases its reserves exponentially. But its currency, the yuan, is not a reserve asset and China has to invest a significant part of its surplus in US dollars. It tries to diversify by investing in natural resources in Africa and Latin America, and more recently its interest in gold has increased, but its continued underwriting of US government debt has exposed it to significant exchange rate risk.
Read More