(C) Common Dreams
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How China Lost $1 Trillion [1]
['Keith Bradsher']
Date: 2017-02-07
What are China’s foreign exchange reserves?
China keeps a firm grip on the value of its currency, the renminbi. For years, that meant keeping the renminbi steady as vast amounts of the world’s money flooded into the country to buy the toys, shoes, electronics and other goods it makes.
Under the rules of global finance, that flood of money should have driven up the value of the renminbi against other currencies, like the dollar. Instead, China kept the renminbi from rising as a way to help its manufacturers compete abroad. The mechanics of how it did that are complicated, but the process resulted in China holding large sums of money denominated in other currencies.
At the peak, in June 2014, the reserves totaled nearly $4 trillion. Inside China, the foreign exchange reserves have been seen as a financial cushion for times of trouble. But they have generated deep frustration in places like Washington — including from President Trump during the campaign.
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[1] Url:
https://www.nytimes.com/interactive/2017/02/07/business/china-bank-foreign-reserves.html
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