China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

Zero Hedge ^ | April 24, 2011 | Staff

[library user]

All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait.

Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be.

Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so.

And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?

From Xinhua:

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

And as if the public sector making it all too clear what is about to happen was not enough, here is the private one as well:

China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.

Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.

However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.

The last sentence says it all. While China is certainly tired of recycling US Dollars, it still has no viable alternative, especially as long as its own currency is relegated to the C-grade of not even SDR-backing currencies. But that will all change very soon. Once the push for broad Chinese currency acceptance is in play, the CNY and the USD will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that US debt is no longer a viable investment opportunity. In fact, we are confident that the reval is a likely a key preceding step to any strategic decision vis-a-vis US FX exposure (read bond purchasing/selling intentions). As such, all those Americans pushing China to revalue, may want to consider that such an action could well guarantee hyperinflation, once the Fed is stuck as being the only buyer of US debt.

[Quix]

YUP.

[bert]

To destroy Obama is in their best interest.

If they draw blood, he will bleed to death before it can be stopped

[Whenifhow]

Idaho to be first Chinese state

http://www.examiner.com/conservative-in-boise/idaho-to-be-first-chinese-state#ixzz1NzPMSP9e

[Nowhere Man]

Idaho to be first Chinese state

Please, tell me this is a joke? I read the article and I hope it is. I read about the Idaho Air National Guard. As much as I like the A-10, I'm afraid that isn't the optimal aircraft to shoot down Red Chinese planes. Too bad they didn't keep the F-102's or the F-4's, those would help. I saw the blurb about buying Michigan, Pennsylvania and Ohio. I live near Pittsburgh and my best friend lives in Ohio, although he works here. Crap, I think I'd better warm up my Marlin Model 60 an buy more .22LR ammo. Please, tell me this is a joke.

My uncle was with the 101st in the Korean War, he fought and shot Red Chinese soldiers. My father was stationed at Camp Casey in 1955/56, I'm sure he saw them and stared them down. Maybe I should keep the Marlin in reserve and buy an M1 Garand or Lee-Enfield, but with my budget, I'd have to go for a shotgun.

[Marine_Uncle]

"I think it’s otherwise—that they planned exactly that. Though you could be right in the sense that they may not have believed they’d actually achieve it so successfully so fast. Reportedly some of the billionaires were not QUITE ready to head to the bunkers."
In all fairness. I was responding to a statement sickoflibs made as how specific in this case high stake holders in the USA where responding to the Chinese issue of financing our debt. Your wording makes it appear the group in mind, (within the context of my brief answer to sickoflibs, being people such as say Donald Trump, are somehow in the position to be active partners within the Chinese Government.
Who in particular do you mean to be included in the "I think it's otherwise---that they planned exactly that." ?
I think you did not read my response to sickolibs within the context of my replie to him correctly.
In either case. It is water over the dam. The Chinese are not stupid. Quite the contrary. They will be very careful in the future as to where their monies are invested in.
They hold a big hand over the US in respect to how much money they are willing to put into supporting our super foolish methods of trying to con the world into investing a now failing economy that at best will take many years to recover.

[Quix]

Ahhhhhhh

Sorry about that . . .

I certainly agree that the Chinese are brilliant and often wiser than we.

I lived there for 16+ years in China and Taiwan.

These are the blokes I was writing about:

NWO quotes:

http://www.freerepublic.com/focus/news/2475963/posts?page=60#60
.
colorful NWO QUIXICATION of quotes:
.
http://www.freerepublic.com/focus/chat/2624713/posts?page=153#153

GEORGIA GUIDESTONES:
.
http://www.radioliberty.com/stones.htm

---

There was in the last year or two—posted [by others, thankfully] on FR—documentation from recently declassified files that asserted that the CIA set up Mao to win the civil war. That would be consistent with some of the quotes cited above.

We shall see how it is all orchestrated. I’ve probably said as much as I can about that at present.

[PeterPrinciple]

I am starting think think that I wish the disaster would happen NOW while these libtards can take full responsibility, and we can reset the entire systems

---

I worked with several farming business that went bankrupt in the 70’s. You could see the problems there but as long as the bank kept lending money, nothing changed. It only became a problem when the bank finally said no and then of course it was the banks fault.

This only becomes a problem when the cash flow stops. What, when, and how this happens is the big question.

[PeterPrinciple]

we’re in for such a mess, it doesn’t really matter.

---

Repeat LOUD and OFTEN....................

[Whenifhow]

These articles probably were never posted on Free Republic (maybe I missed them?) about the Toledo / China connection. One sale went through already - China purchased some restaurants on the docks.

They were supposed to purchase more land and it fell through. I wrote the authors of a couple of articles in the blade and hopefully they passed on the information to council members.

The local news media hyped Mayor Bell’s recent trip to China and one of the broadcasters went with him. This is to sell the public on the purchase of this land.

When Obama was in Toledo Friday June 3, there was a “wonderful” picture of Obama and Mayor Mike Bell (commies in action) and Obama went to Rudy’s Hot Dog Stand instead of Tony Packo’s (what an idiot!).

http://www.toledoblade.com/local/2011/06/04/Obama-s-visit-includes-time-for-lunch-shopping.html

List of Free Trade Zones
http://ia.ita.doc.gov/ftzpage/letters/ftzlist-map.html

Info on Free Trade Zones
Chinese Pipeline of Investors

This information is being sent out to alert Americans as to what is happening in Idaho and throughout this country that involves the public officials soliciting the Communist Chinese to buy American citizenship via the EB-5 visas.

In June of 2010 Idaho Gov. Butch Otter and a delegation including local businesses went on a trade mission to China. The businesses were looking for Chinese that would purchase their goods that could be imported into China, while Gov. Otter invited the Communist Chinese to bring their money and move to Idaho to invest in our economy thru the EB-5 visas.

http://www.iqrealestate.com/ShowNews.cfm/NEWS/67682
http://www.chinadaily.com.cn/cndy/2010-06/29/content_10032004.htm

Coeur d’Alene Idaho Chamber of Commerce Trip to China
Idaho an attractive site for investors looking for better place for families.
http://www.cdapress.com/news/business/article_dd336508-81fa-5ca8-a082-b9196b7cad98.html

---

Idaho Eagle Forum Message

http://republicbroadcasting.org/?p=13254

Excerpt:

John Idaho Eagle Forum has been sending information to the SECOND AMENDMENT COMMITTEE for some time about the Communist Chinese moving into Idaho. In their ALERT they said that the Chinese were living in the FOREIGN TRADE ZONES. These FTZ’s are not residential areas. I asked them yesterday to send this VERY SERIOUS information “Chinese Pipeline of Investors” out across America so that everyone will better understand what is taking place right now in our country. The Communist Chinese are in the process of COLONIZING America.

Jane Lesko, President of Idaho Eagle Forum

Infusion From China for Toledo, Ohio

http://www.nytimes.com/2011/05/25/realestate/commercial/riverfront-in-toledo-ohio-gets-infusion-from-china.html?_r=1

Mayor Bell’s sales pitch in China adds key player

http://www.toledoblade.com/local/2011/05/26/Mayor-Bells-sales-pitch-adds-key-player.html

Toledo mayor’s mission to China

http://www.toledoonthemove.com/news/story.aspx?id=621279

[Las Vegas Dave]

OHIO PING...The Toledo / China connection!

http://www.freerepublic.com/focus/news/2709808/posts?page=249#249

[Nowhere Man]

If the USA is cut off from the international market it will be necessary to rebuild all these missing industries within the country, and fast. I think we'll need another Stalin to accomplish that, if we are lucky. USSR didn't lose any of its technologies; only the physical assets were destroyed in the war. Realistically speaking, it would be a miracle if the USA can sustain itself 10 years after the isolation begins.

A bit late in replying but I was just reminded of this thread today. A short note, sometimes I think we do need an American version of a General Pinochet, it is the roll of the dice, we must make sure that this leader has the idea of restoring the Republic back to it's Constitutional roots, not just another warlord. It sort of reminds me of Eric Flint's "1632" series where a West Virginia town is transported to 1632 Germany, during the 30 Year War and they made the point where industry has to "gear down to a sustainable" late 19th to early 20th Century level. I think to rebuild our industry, there will have to be some gearing down, maybe more akin to a 1970's level and we would have to scrap many regulations, double so for those the EPA imposes on us. Brown Chested Nut Scratcher or the Yellow Legged Flying Burper, sorry, but we have a country to rebuild, we are putting a car factory, refinery and steel mill here.

[Marine_Uncle]

"Sorry about that . . ."
No apology needed. My journey in understanding who runs the world in the background started with a book titled None Dare Call It Conspiracy, written back in the seventies by a then Master Program in Political Science student, forget his name now. Detailing some aspects of the big players behind the scenes and not so behind the scenes. CFR, UN, the Feds, Wall Street Bankers, large industrial complexes, the other large banks in old Europe etc..
But thanks for the heads up. I often write one liners any more to folks simply because I am becoming rather lazy.

[Quix]

Am sure glad you’re awake.

Why, in your view, are sooooo many FREEPERS still asleep and/or willfully blind about globalism’s extent, reach, depth, etc.?

[Pontiac]

I am starting think think that I wish the disaster would happen NOW while these libtards can take full responsibility, and we can reset the entire systems

Well be careful what you wish for.

If China dumps 2 Trillion dollars on to the open market the US will become a third world nation over night.

Then you have to consider that China will be just the first to jump ship.

Very soon we can expect to have inflationary rates of 300% or more.

Our socialist chickens are coming home to roost.

[Marine_Uncle]

"Why, in your view, are sooooo many FREEPERS still asleep and/or willfully blind about globalism’s extent, reach, depth, etc.?"
Many people just can't accept the reality it presents. And for those that can see it for what it is, feel there is little or nothing they can do to prevent it from happening. Which is probably true within the whole framework of the issue. So most often those that fit that category feel it is not worth even speaking about it.
And there is always that fear factor. Incidentally, I see the book I mentioned is still being sold by places like Amazon.com. And the author's name is Garry Allen.
For me it was a real eye opener back in 1976. It was my first real encounter with what is so hideous and un-Godly in it's raw form. Since that time, the issue is always within my thought trains. Once dots are connected. It becomes hard to laugh it off as just some long over preached phenomena.
All one can do is share information.

[Quix]

I agree wholesale.

Having studied it since 1965, . . .

It has sure been present in my mind all these 45+ years.

And to see the incremental advancements of such evils right along the lines the Bible long predicted has been something to watch, for sure.

George Orwell also saw such coming. I have wondered if he was in on the elite's plans given his social circles. I'm pretty sure the Huxley brothers were.

Some visual food for thought:

[Alamo-Girl]

Thanks for the ping!

[Quix]

Thanks for your kind reply.

Where do you think Orwell’s prophetic insights came from?

Inside info?

Great perceptivity regarding political forces and trends?

What?

[Alamo-Girl]

I have no clue.

[Marine_Uncle]

OT and NT prophecies shall come to past as HE decides on who does what, how and when.
It's the Lord's call. As you are fully aware. All we can do is try our best in doing those things that please HIM, according to HIS laws. And simply because knowledge of the eventual one world government is known, should not prevent us from seeking good leaders, those that do have Godly principles in mind and in deed. And what has worked pretty well in principle and historically for America with that wonderful Constitution, and Bill of Rights etc., stand up for what is right, with caution, ever looking forward to that day somewhere in the future when the Son of God shall return bodily and set things straight.
I rest in the fact that God does take care of HIS own. HE has tenderly shown me on a personal basis, over the years.
Through the heart aches as well as the glorious and tender moments. God is good! He is at the helm. As has been customary with me for a few years, I try to wish the last Freeper(s) a great upcoming day. I may be signing off soon.