Tuesday, June 4, 2013

YY - China’s Flawed Balance-of-Payments Position

China’s Flawed Balance-of-Payments Position -
Yu Yongding -

"...The value of China’s assets as future claims on real resources has already been diluted by dollar depreciation, and calls in the US for inflating away America’s debt burden portend a further decline. Moreover, while China may have profited from the rise in government-bond prices over the last few years, prices have been inflated artificially by expansionary monetary policy in advanced countries, which implies that the bubble could burst. Whether through inflation or collapsing government-bond prices, China will suffer significant capital losses on its foreign assets, further damaging its investment-income balance..."


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