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China Finds $3 Trillion Just Doesn't Pack the Punch It Used To

  • Foreign currency reserves swoon, ending 22 years of gains
  • A weaker yuan and capital outflows increase dollar burn rate
Bloomberg business news

China Panic Clashes With Modest Outlook

China’s $3 trillion-plus in foreign currency reserves, the biggest such stockpile in the world, would seem to be a gold-plate insurance policy against the country’s current market chaos, a depreciating currency and torrent of capital leaving the country.

Maybe not, say economists. First off, data point to an alarming burn rate of dollars at the People’s Bank of China. The nation’s stockpile of foreign exchange reserves plunged by $513 billion, or 13.4 percent, in 2015 to $3.33 trillion as the nation’s central bank coped with a weakening yuan and an estimated $843 billion in capital that left China between February and November, the most recent tally available according to data compiled by Bloomberg.