the rumor has four parts:
1. China's pool of USD 812 billion reserve (eoy 2005) is more than 50% allocated to non-USD (no clue what % is comprised of HKD which is hard-pegged to USD, but HKD is small in any case, as our interest rate here in HK is in line with US interest rate and so no obvious evidence of large HKD hoard floating out there)
2. China's flow of USD accumulation going forward is per basket allocation (think 60%+/- to USD)
3. the (pool) reserve allocation will hit media whenever US officialdom decides to press hard on the issue of currency manipulation (meaning Congress apparently wanted and may still define manipulation by yet another nonsensical law) and close out the issue for once and for good
4. China's holding of US T-bills are mostly on the short end (5 years and under, more like 3-), while Japan's holding of T-bill is more on the long end, and its USD 800-1,000 billion reserve is mostly in USD
I am astonished (as in amazed, in the archaic meaning, but not so much surprised, in the vernacular). If true, the move is so ... how should I say ... Chinese ;0)
If true, it would be like when the 'UN troops' marched to the Yalu River dividing China and North Korea back in the early 50s, and all of a sudden be both astonished and surprised by vigorous opposition, and no flowers on the icy paths.
If true, the bagholders of USD are out there somewhere, but elsewhere from China, leaving Japan, Taiwan, Singapore, Hong Kong, Korea, Malaysia, Middle East, Latin America, and perhaps Russia and India, the usual suspects.
If true, that would mean the US will have to substantially weaken its 'loyal allies and dependable friends' so as to improve China's infrastructure and manufacturing science further ... thus fulfilling Pentagon's prophesy of China being threat on par with whatever else Pentagon is having a go at right now without too much success ...
... the mind boggles.
Coxe's comments are interesting, though I doubt China would allocation hundreds of billions (as opposed to 10s of billions) on paper derivatives if they do not even like T-bills.
If all of the above holds some measurable truths, then 2006 may not disappoint on the excitement front.
Chugs, J |
