Here’s a striking fact from Eichengreen’s Exorbitant Privilege: “Today, in contrast, Chinese holdings of U.S. government and agency securities exceed $1,000 per resident.”
That dramatizes the under-comprehended fact that China’s exchange rate policy is a huge ripoff for the bulk of the Chinese population. At market exchange rates, China’s per capita GDP is under $5,000 per head. Disbursing that horde of dollar-denominated financial assets to the population so that people could obtain additional foreign-made goods would be a boon to Chinese people’s welfare. But it would be bad for the owners of politically influential export factories, so it doesn’t happen.