Share this page!

Enter Twitter Thread URL to Unroll

Needs to be the full URL like: https://twitter.com/threadreaderapp/status/1644127596119195649

How to get URL link on Twitter App

  1. On the Twitter thread, click on or icon on the bottom
  2. Click again on or Share Via icon
  3. Click on Copy Link to Tweet
  4. Paste it above and click "Unroll Thread"!
  5. More info at Twitter Help
Brad Setser Profile picture
@Brad_Setser
Jul 8 • 6 tweets • 3 min read Twitter logo Read on Twitter
Think it is progress of sorts when a New York Times feature on "China by the numbers" doesn't mention Chinese holdings of Treasuries but does mention China's belt and road lending ...

1/x
nytimes.com/2023/07/07/bus…
China's holdings of US Treasuries did increase sharply from 2002 to 2010, reaching about 10% of US GDP (and far higher share of China's GDP). But they are now only about 5% of US GDP.

(China also holds a lot of Agencies for the record)

2/
As a share of the "available for sale" Treasury market, China's holdings rose to almost 20% of the market, but are now down to just over 5% ...

3/
That's because China's holdings of Treasuries have essentially been flat (slightly declining recently even with the adjustment for Euroclear custodied Treasuries thanks to a shift to Agencies) while the stock of Treasuries increased massively ...

4/
And it is because China made a policy decision back in 2010 that it had plenty of reserves (and plenty of Treasuries) and started to consciously move fx into the hands of the policy banks and investment funds to support what became the Belt and Road.

5/
I tell this story, with plenty of institutional details, in an article that I recently did for the China Project.

The net result: it took 10ys, but China now has more credit exposure to the belt and road than the US Treasury!

6/6
thechinaproject.com/2023/06/29/sha…

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Brad Setser

Brad Setser Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @Brad_Setser

Brad Setser Profile picture
Jun 30
Bloomberg has picked up on my China Project story outlining all the pools of foreign assets that China's government holds that aren't counted as formal foreign exchange reserves ...

1/
https://t.co/MXZgdfofDYbloomberg.com/news/articles/…
These aren't necessary hidden sources of liquid foreign currency (not all of China's $3 trillion and change in formal reserves are liquid either, SAFE has a big investment portfolio). But they are funds that China could have held as fx reserves and choose not to.

2/
Some of these pools of FX are well known and not controversial -- the PBOC holds $140b in fx from the banks required reserves for example (other foreign assets) that aren't consolidated into its formal reserves (the orange bars below)

3/
Read 24 tweets
Brad Setser Profile picture
Jun 30
Happy to answer Mr. Balding's question:

a) China is in fact running massive surpluses: the counterpart trade data suggests a bigger surplus than appears in China's BoP data;
b) rate differentials favor the USD &expectations now favor the USD, so exporters are hoarding fx
The highest frequency data (while incomplete -- the numbers don't capture the net fx position of the policy banks/ other funds that deploy SAFE's fx) suggests China stopped adding to the fx position of the SCBs and the PBOC after April of last year
China so far has -- best I can tell, but do correct me if you see the flow -- only recently tried to slow depreciation, and it has done so via signaling (the fix) rather than a real show of force. PBOC and SCBs haven't dipped into the big stocks of fx from 20 and 21 ...
Read 6 tweets
Brad Setser Profile picture
Jun 29
It didn't take long for Zambia's bonds to be priced for (restructuring) perfection -- or perhaps for a very soft application of the principle of comparability of treatment to official credits.

1/
nasdaq.com/articles/restr…
Zambia's bonds have long traded a bit rich relative to the IMF's debt sustainability analysis -- and at 55-56 cents on the dollar, I think they are trading a bit rich relative to the deal that Zambia struck with China Exim.

2/
A bit of bond math. The $3b in bonds probably have about $600m, maybe a bit more in accrued interest. So if that is honored, and the face of the "claim" is cut in half and the coupon on the official deal is doubled ...

3/
Read 10 tweets
Brad Setser Profile picture
Jun 28
. @KeithBradsher asks an important question in the New York Times -- just how much growth can China get from exports to help wean its economy off investment ...

1/x
nytimes.com/2023/06/28/bus…
The background --

China been investing close to 45% of its GDP for some time now (ever since the global crisis) and that growth engine is running into limits.

But even 45% of GDP investment never generated a current account deficit ...

2/
More background: China accounts for 30% of global manufacturing output (more than its share of the global economy) and the rest of the world is worried about the vulnerability to economic coercion created by China's manufacturing dominance. 3/
Read 11 tweets
Brad Setser Profile picture
Jun 27
I tip my hat to Martin Wolf's chart game, which remains unsurpassed.

Great, great chart --

Massive swings in China's bilateral balance with the EU, the UK and Japan over the last three years.
Wolf's chart shows the fall in the US bilateral deficit with China -- which no doubt reflects the incentive to minimize bilateral trade created by the Trump tariffs. There though is a lot of embedded Chinese content in US imports from the rest of Asia.
China's rising surpluses with Europe (and the UK) and Japan are consistent with an important but often overlooked global fact -- China's share of the global goods surplus is higher now than in the past ...
Read 7 tweets
Brad Setser Profile picture
Jun 19
China's auto exports are going global with incredible speed. China is now a net exporter of finished cars to the world (a huge shift).

It is also on track to become a net exporter of autos and auto parts to the EU by the end of the year. Germany take note! Image
This is a function of the innovativeness and production skills of firms like BYD ...

Which is going global on the strength of its EVs (and its EV supply chain, including its battery supply chain)

thewirechina.com/2023/06/18/byd…
But there is also no real doubt that China's EV industry developed in a protected (by tariffs and de facto tho not de jure Chinese content requirements) local market, and there are multiple trade cases against China that the EU could pursue

politico.eu/article/french…
Read 4 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!

Send Email!

:(