Chinese Economics Thread
- Thread starter Norfolk
- Start date
Chinese economy hurt by the pandemic and internatioinal geopolitical conflicts in March. PMI poll result, in manufacturing and service sectors, and combined, all fell below 50%, were 49.5%, 48.4% and 48.8%, respectively. They were 0.7%, 3.2% and 2.4% below the last result in Feb.
Meanwhile, companies responded to the poll expressed cautious optimism as pandemic being under control in some regions.
Meanwhile, companies responded to the poll expressed cautious optimism as pandemic being under control in some regions.
This might be a silly question but why the hell did Russia have hundreds of billions stashed overseas especially the US? Makes no sense. Was there no way for Russia to station that money at home in bank accounts? Could it not have just transferred the funds months before invasion?
Russia moved out of dollars but kept euros and yen. Russia didn’t think EU and Japan would freeze euros and yen.
China need to move away from Western currencies ASAP. West will immediately freeze these assets if a war breaks out over Taiwan.
In4ser
Junior Member
Not sure if it's true but some people have theorized that it was intentionally left to be taken like bait. If Russian assets and money weren't seized and frozen, then there wouldn't have been as big of an impact or argument for de-dollarization by other countries.
Size matters. Losing hundreds of billion dollars attracts far much more attention and dismay than if it were a few million dollars. Also because the West did that, the Russians could argue that they defaulted on their promises and could seek to renegotiate the contract with rubbles or gold instead of euros or dollars. Hundred of billions might be a lot of money, but it may be a relatively small price to pay to sink the entire western financial system.
Personally, I think it might be a bit of a stretch that Moscow planned things out this far but it's possible especially if things were coordinated beforehand with China.
Because to "station that money at home" means keeping it all in rubles, because your home central bank can only hold the currency of it's own country
Simplified summary of how cross currency FX reserves work - the Russian central bank has an account at the EU central bank to hold euros and they an account at the US Federal Reserve to hold USD. This is because when you send money internationally, you're not actually sending money. For example, EU buys gas from Russia using USD - what they're doing is actually telling the US FED to deduct dollars from the EU's central bank dollar account at the FED and transfer the amount to the Russian Central bank's account that's also the US Fed. In this case the US FED is the ledger that knows and keeps track of who has how many dollars because the US Federal reserve is the only entity capable of creating and destroying US Dollars.
Since money just digital information representing a balance, it prevents the EU central bank from saying "we have 400B USD" or making up some other value of USD they have if the actual ledger not kept at the US FED.
There are small exceptions with central banks holding actual physical paper currency of other countries but this amount is tiny because of liquidity issues and the actual storage and transfer process for billions of dollars or paper currency among other things.
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Why couldn't they have stationed them as Eurodollars in Russia?
The term eurodollar refers to U.S. dollar-denominated deposits at foreign banks or at the overseas branches of American banks. Because they are held outside the United States, eurodollars are not subject to regulation by the Federal Reserve Board, including reserve requirements.
These yankees don't even realize the danger of the world moving away from the $US.
key phrase is "dollar denomindated deposits" - that's not actual physical dollars. It's basically a contract from the foreign bank promising you'll get dollars back when the deposit matures, but that's only a promise that's ultimately is subjected to counterparty risk and breakable.
Fair enough, makes sense. And I guess China would not have wanted Russia to station hundreds of billions of dollars equivalent in Yuan because that would have caused too much Yuan appreciation?