China has more than US$1 trillion foreign reserve

[gopalking]

Today China has more US$1 trillion foreign reserve and already surpass Japan. Rank world top.
How come they can made so much money?

 

[p2prada]

US forced China to buy their bonds to prop up each others economy. China is a proud owner of $2Trillion(not 1) in Paper money(not actual money, something like Promisory notes).

 

[F-14]

with the Depreciating value of the Green back the PRC is finding it hard to make the Money work for them and as P2P said the buying of US Debt Back bonds by the PRC has over exposed the Chinese to the Ill effects of the Recession and the Crumbling of the US sub prime Market

 

[sky]

Today China has more US$1 trillion foreign reserve and already surpass Japan. Rank world top.
How come they can made so much money?

Pretty stupid qustion to ask really,have you not heard about the very fast growth of china over the last 20 years?

India started quite late and so its reserves are only about 300 billion dollars,but its ecconomy is smaller then china's.

Have you never heard on the news america asking china to loosen the yaun to dolllar peg.This is where china buys dollars to keep it's yaun artificially low.Which then gives chinese companies a un fair advantage over american companies when trying to sell there goods.

 

[qilaotou]

It's a deterence that China can use to bancrupt the US of A.

 

[ppgj]

It's a deterence that China can use to bancrupt the US of A.

you cannot. because you bankrupt them you will also go down with them.

 

[Vladimir79]

It's a deterence that China can use to bancrupt the US of A.

M8, if you try to sell off your bonds to banqrupt US, you will lose most of your FOREX. The more you sell the more the dollar goes down killing your returns. Your dollar holdings are trapped unless you want to go banqrupt yourself. Not to mention the collapse of the dollar leads to the collapse of the yuan which leads to rampant inflation in China.

 

[badguy2000]

unless CHina were to decide to show hand ,china would not dump USA's T-bills.

of course, it is feasible for China to sell some of its owned USA's T-bill ,as a way to "tap" yankees and make yankees make some concessions

 

[Vladimir79]

of course, it is feasible for China to sell some of its owned USA's T-bill ,as a way to "tap" yankees and make yankees make some concessions

If China only sells a small portion of T-bills, the only thing you do is drive down the value of the dollar which is exactly what they want. It increases their export potential and increases GDP. All they have to do is a little manipulation to close the inflationary gap and wallah, higher GDP growth.

 

[qilaotou]

This is not only problem for China, but also for EU and Japan. Must buy is the weakness of China's dependence on US market. The only advantage is that US won't be able to take unilateral measures forcing up the appreciation of RMB. I think that China as well as others see an opportunity using bilateral currency in trade to reduce US dollar hegemony, and it may gradually create a better financial world. Keep buying US bond is a win-win situation for China-US economies at the moment. But it is a real deterence in a sense that a sudden sell can sink dollar and rock everyone's wallet too.

 

[Koji]

M8, if you try to sell off your bonds to banqrupt US, you will lose most of your FOREX. The more you sell the more the dollar goes down killing your returns. Your dollar holdings are trapped unless you want to go banqrupt yourself. Not to mention the collapse of the dollar leads to the collapse of the yuan which leads to rampant inflation in China.

It has a similar principal to Mutual Assured Destruction and nuclear weapons. It serves as a deterrent.