Every time you hear an financial pundit on Fox Business News, CNBC or Bloomberg talk about global liquidity being part of the core central banks handing out free dollars and donuts to investment banks for the past 8 years is missing one substantial sidebar: China. The Chinese have more money than God. Their central bank has more money in its foreign currency reserves than the entire economies of Brazil, Mexico and Russia produce annually.
And in September, for the eighth month in a row, despite Beijing alone dishing out $26.6 billion per month in 2016, for a total of $320 billion, which is what Brazil has in its central bank reserves, the People’s Bank of China (PBoC) has … even more money than it did in August.
Forex reserves rose by a whopping $17 billion in September to reach a total of $3.109 trillion, following a $10.5 billion increase in August, the PBoC said over the weekend. To put that into perspective, in August, China added more money to its bank savings account than what Venezuela has in its central bank. Then doubled it in September. China can buy Venezuela in cash if it wanted it, and still have trillions of gold coins and dollar bills and euros available to prop up its own currency.
Economists polled by Reuters expected reserves to rise by just $8 billion. This is the first time in three years that the PBoC accumulated reserves for 8 consecutive months. The consistent rise has led some analysts to believe the PBoC will buy more foreign currency this year than it dishes out to the market in the form of bailouts, currency support and special bank loans.
Also in the PBoC data, outbound non-financial investment dropped 41.8% in January-August from a year earlier as authorities crack down on what they call “irrational” overseas projects by Chinese individuals and corporations. The State Council said in August that China will cap overseas investment primarily in real estate and Hollywood assets.
By Kenneth Rapoza