SAFE, State Capitalist?

One of the questions raised by the expansion of sovereign wealth funds – back when sovereign funds were growing rapidly on the back of high oil prices and Asian countries’ increased willingness to take risks with the reserves – was whether sovereign funds should best be understood as a special breed of private investors motivated […]

The good and bad news in the World Bank’s China Quarterly

The good news in the latest World Bank China Quarterly: One. China is growing, thanks to China’s government. The World Bank estimates that the government’s policy response will account for about 6 percentage points of China’s 7.2% forecast growth (p. 8). That’s good. There is a big difference between growing as 7% and growing at […]

I am pretty sure China didn’t sell Treasuries in April (or May, for that matter)

The fall in China’s recorded Treasury holdings in April has attracted a fair amount of attention. Too much, in my view. Best that I can tell, China shifted from bills to short-dated notes in April rather than actually reducing its overall Treasury portfolio. It just so happens that China buys all its short-term bills in […]

The return of Bretton Woods Two? (or Bretton Woods 2.1?)

If you read the headlines earlier this week, you might well have concluded that the dollar’s days as the world’s leading reserve currency are numbered. Yu Yongding of China’s Academy of Social Sciences suggested that China should shift away from the dollar.* He isn’t alone. China’s population is no longer convinced that US Treasuries should […]

Change or more of the same?

Simon Johnson poses the core question facing the United States and China well: If [China] doubles [its] holdings of US dollar assets over the next couple of years (let’s say, going towards $4trn), effectively financing our budget and current account deficit, will we all end up safer or more vulnerable? China currently has a bit […]

Different conceptions of China’s future role in the global financial system

Discussions of China’s role in the world that aren’t dominated by economists often end up focusing on China’s willingness to act as a “responsible stakeholder” in the global system. That is diplomatic code for China to do more to support the current international financial and political order that it has — in this view — […]

Additional confirmation China bought US equities from mid-2007 to mid-2008

The Treasury released the details of its survey of foreign portfolio investment earlier today. Foreign purchases of mutual funds — including, apparently, money market funds — are counted as equities in the US data. So there was a risk that the large rise in China’s equity holdings that I noted earlier (total equity holdings reached […]

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