China: 10th consecutive monthly gain in reserves - BBH
|Analysts at BBH note that China's reserve rose for the 10th consecutive month, but the $10 bln increase was a bit smaller than expected.
Key Quotes
“Given its continued preference for Treasuries, an increase in China's reserves often means an increase in its demand for US securities. This may not be the case with increase in November reserves. Given the developments in the foreign exchange and bond market, the increase in reserves is likely a function of valuation adjustment rather than new inflows.”
“Separately, we note that China's Sinopec is suing Venezuela's PDVSA to recover unpaid bills. What is interesting is that the case will be heard in US courts. This follows China's previous decision to offer dollar-denominated bonds. These developments should give pause to those who think that China can replace the US on the global stage or that the yuan is going to replace the dollar as the main reserve asset in any kind of meaningful timeframe.”
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