Monday 19 January 2009


CHINA NOT A LIMITLESS SPONGE FOR U.S. DEBT
Growth of Chinese forex reserves slows at a time when Washington needs Beijing to buy Treasuries more than ever.

Tina Wang

Forbes, January 19, 2009

In the past few years, the ballooning of China's foreign-exchange reserves seemed a given, the yin to the yang of rising U.S. debt. But growth of the country's forex reserves slowed last year for the first time in nearly a decade, leading many to wonder if Beijing will slow its Treasury purchases as the U.S. government seeks to ramp up debt issuance to fund stimulus spending.

China's forex reserves climbed 27.3% in 2008, to $1.9 trillion, down sharply from growth of 43.3% in 2007, based on central bank figures quoted by state news agency Xinhua last week. The Xinhua report attributed the yearly slowdown--the country's first since 2000--to shrinking trade surplus, an outflow of speculative capital and plunging foreign direct investment.

The country's forex reserves actually diminished in October, for the first time since 2003, plunging by $25.9 billion, even as China's trade surplus reached the third-highest level on record that same month. (See "China's Disquieting Trade Surplus.") Forex reserves grew by only $5.0 billion in November and $61.3 billion in December, when the trade surplus hit its second-highest level ever because imports fell faster than exports. This implies the capital account is the primary contributor to the slowdown in reserve accumulations.

(...) [artículo aquí]

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