Treasury's Weekly Release of U.S. Foreign Exchange Reserves shows the levels of various official foreign U.S. International Reserve Position - Dec 28,
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Growth strategy
Deceived by the reports of its own intelligence community and the analyses of the World Bank, the West took it for granted that China was on its way to a liberal democratic order and a capitalist economic system when in fact China held on to its mercantilist strategy. It steals technology, promotes Chinese monopolies, and unfairly insulates its state-owned companies from foreign competition.
Since then, reserves have come down and at the end of , the currency reserves stood at 3. For the United States, currencies other than the US-dollar count as assets in the balance sheet of the Federal Reserve System, while for China, the US-dollar and currencies other than the national Chinese currency are foreign exchange reserves. For China, this means that the Chinese foreign exchange reserves result from a policy when the Chinese central bank had been buying more foreign currencies than it sold throughout the years from to and since then has been a net seller.
Thus, the Chinese accumulation of U. The U. Treasury informs that as of December , China is the top holder of American government securities with 1. Beyond the United States, China accumulates its large export surplus also with Hongkong, which, however, re-exports most of its imports to the United States.
Yet it would be wrong to assume that China has an export surplus across the board. In fact, it has considerable trade deficits with the highly industrialized upstream exporters like Germany, South Korea, and Japan and with the luxury goods exporters, and has deficits also with exporters of natural resources and of agricultural products like Saudi Arabia, Australia, and Brazil.
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If America should diminish its role as the largest absorber of Chinese exports, it will become difficult for China to maintain the present level of its currency reserves. After a peak of For the first half of , China registered its first current account deficit in twenty years.
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Reinvesting the profits which the companies earned from their exports provided the funds to expand the capital base of the Chinese economy. Over the same two-decade period, the global average of U. The administration achieved an annual average return of 3. It will also strengthen the medium- to long-term asset allocation of foreign-exchange reserves this year to try to preserve and increase the value of the assets.
A more diversified structure also helps China reduce foreign-exchange risks, she said. Caixin has learned that the reserves have been invested in more than 50 types of assets, covering almost all types of financial assets in the international market, with more than 6, targets involving over 30 currencies. However, strong growth in exports and receipt from the Southern African Customs Union, together with slower growth in imports has led to renewed growth in the reserves in recent years.
As at the end of , the reserves had increased by The reserves were sufficient to cover approximately As of April , the reserves were P Foreign Reserves.