Does all that money come from foreign trade surplus? But China’s net export is not THAT big, right? It imports a lot, too. Are there any studies on the sources and breakdown of China’s foreign exchange reserves?
THANKS!!
Sorry about the confusion. By sources of foreign exchange reserves, I didn’t mean which countries; I meant which avenues (e.g. trade surplus, FDI, tourism, what else…). Since China imports lots of parts to assemble goods that it exports to US, I assume China runs trade deficit against Southeast Asian countries. Hence my question about the sources of China’s forex reserve accumulation.
The US.
Wal Mart imports 30% of Chinese consumer production capacity each year.
Here’s the big breakdown:
US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2% (2006)
Since China has strict importing rules, they can pick and choose what will be imported, therefore creating a massive foreign exchange reserve.
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