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China’s US Dollar Holdings

By Matthew Yglesias on February 2, 2011 at 3:45 pm

"China’s US Dollar Holdings"


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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.


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