from Follow the Money

So private Chinese citizens now prefer renminbi to dollars …

January 8, 2005

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I keep checking the People’s Bank of China’s web page for the official release of China’s October reserves. Alas, they are still not out formally (a hint: think $542.7 billion). China may be a world-class manufacturing economy, but its central bank is not meeting world-class standards for the release of reserve data. Most other countries have already released end December data.

But there are some other items of interest on the PBOC’s web page. Consider this release on dollar denominated deposits in China’s banking system. Ignore the data about growing dollar deposits of "enterprises and public institutions." That line seems to include inflows from "foreign funded" institutions that set up shop to finance China’s trade. More trade means more need for trade credit. Focus instead on what is happening to the dollar deposits of Chinese households. Down 6% year over year.

Overall foreign currency deposits (the translation is not 100% clear if this is overall deposits or household deposits, a chart would really help) seem to have fallen $3.2 billion in November. Why hold a likely to depreciate dollar when you can hold a likely to appreciate renminbi? If domestic Chinese citizens were betting on the renminbi in November, you can bet everyone else was trying to do so too ...

Like many other people, I would love to know what happened to China’s reserves in November.

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