China has $3 Trillion in “Hidden” Currency Reserves: Economist Brad Setser Made Bold Claim

China has been known for its massive foreign currency reserves, which have played a significant role in stabilizing its economy over the years. However, according to economist Brad Sester, the country’s actual currency reserves may be far larger than what meets the eye.

 

Setser claims that China has an additional $3 trillion in “hidden” currency reserves, which could have significant implications for the global financial dynamic. Setser believes that the overall amount of assets in foreign reserves in China could be around $6 trillion.

 

In a recent interview, Setser, a renowned economist, and expert on international economics, revealed his startling findings regarding China’s currency reserves.

 

He explained that while the country’s central bank, the People’s Bank of China (PBOC), officially reports its foreign exchange reserves at around $3.2 trillion, the true extent of China’s reserves is likely much higher.

Setser’s research indicates that China has been accumulating substantial amounts of foreign currency through various channels that are not fully reflected in the official data.

 

One significant avenue for this accumulation is through state-owned enterprises (SOEs). These entities, acting as intermediaries for the government, have been amassing foreign currency in large quantities, effectively boosting China’s overall reserves.

 

The economist believes that the Chinese government has deliberately kept these additional reserves hidden to exert greater control over the currency markets and maintain a competitive advantage in international trade. By concealing its true reserve levels. China can potentially manipulate its currency’s value and protect its export-oriented economy from fluctuations in global markets.

 

The implications of China’s hidden reserves are vast and could impact global economic dynamics. The country’s ability to intervene in currency markets, thanks to its substantial reserves, can influence exchange rates, trade flows, and even global financial stability. It provides China with a significant advantage in managing its economic affairs, but it also raises concerns among its trading partners and financial analysts.

 

Setser’s revelations come at a time when tensions between China and other major economies have been on the rise. The United States and other countries have long accused China of unfair trade practices, including currency manipulation. The revelation of China’s hidden reserves could further these allegations and heighten calls for greater transparency in China’s economic policies.

 

It remains to be seen how China will respond to Setser’s claims and whether it will address the concerns raised by his research.

 

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