Forex reserves drop for first time since 2003

China Daily ^ | 12/24/08

[TigerLikesRooster]

Forex reserves drop for first time since 2003(China Daily)

Updated: 2008-12-24 07:38

China's foreign exchange reserves have declined for the first time in five years after peaking at $1.9 trillion at the end of September, a State Administration of Foreign Exchange official has said.

Cai Qiusheng, head of the foreign debts section under the capital-account management department, made the remarks at an annual meeting of China's import and export enterprises held over the weekend, Shanghai Securities Journal reported yesterday.

But Cai did not say in which month, October or November, the forex reserves fell below the $1.9-trillion level, nor did he disclose the current size of the forex reserves.

Central bank data show that at the end of September, China's forex reserves stood at $1.9056 trillion, a growth of 32.92 percent over the same period of last year. The reserves increased $377.3 billion in the first nine months of this year, $10 billion more than the year-earlier increment.

Yuan Yuedong, a senior researcher with the global financial market department of Bank of China, believes the latest reduction would not affect the Chinese economy adversely.

He attributed the downtrend in forex reserves to the recent slower appreciation of the yuan and short-term depreciation against the US dollar; and possible increased offshore investment by Chinese companies.

An investment-bank analyst who declined to be named, said the forex reserve decrease might be related to capital withdrawal from China by some foreign institutions whose liquidity was tight.

But Commerce Minister Chen Deming said earlier that there was no sign of large amounts of capital flowing out of China and that China remained an attractive destination for FDI.

[TigerLikesRooster]

[TigerLikesRooster]

Ping!

[dennisw]

Drop in Forex reserves is a direct result of China exports dropping. Europe and America are buying far less. The export model is broken.... For the time being at least

Harbor Freight sells ChiCom multimeters for $2.99. Bought three. How does China possible make money on those?

[TigerLikesRooster]

They are trying to reduce social cost from unemployment by exporting goods at loss, as you may already know.

They are in bailout mode as much as U.S..

[dennisw]

They are trying to reduce social cost from unemployment by exporting goods at loss, as you may already know.

Yup and that's why they financed our trade deficit for years. To build up their industrial base and industrial knowledge base. Factories were sometimes operated at a loss to achieve the "Dear Leaders" ultimate goal. Which is a very reasonable goal. Which is industrial/technological might

I knew this while it was going on. But it is much much clearer today why they finance the US trade debt

They are in bailout mode as much as U.S..

Yes indeed

[djf]

Post-Olympic, Post-Bubble, Post-Krispies TANK!!!

Next step:
China goes the way of the Soviet Union, breaking up in to a bunch of unpronounceable provinces.

[TigerLikesRooster]

Not really. You can pronounce “Tibet.” :-)

[djf]

Merry Christmas, FRiend.

Keep the powder dry, and the beans stashed good.

Who knows? As much as we complain and worry and fret, maybe the world ain’t such a dam chitty place after all!

regards,
djf