Monday, February 27, 2006

Foreign Currency Reserves

An International Herald Tribune article informs us that this isn't the first time China has amassed vast foreign currency reserves by trade imbalances. (Hat tip: Economist's View)
China will soon release statistics showing that it has passed Japan as the biggest holder of foreign currency the world has ever seen. Its reserves already exceed $800 billion and are on track to reach $1 trillion by the end of the year, up from just under $4 billion in 1989. But China has held a similar position before.
Lest one should start to panic, remember that America receives more gain than pain from its trade with China.