Tuesday, August 17, 2010
China Buying Fewer Treasuries as Yields Fall
Linda Yueh, an economist at Oxford University, talks about China reducing its holdings of Treasuries and the country's relations with the U.S. China's holdings of long-term Treasuries fell in June for the first time in 15 months, dropping by $21.2 billion to $839.7 billion, a U.S. government report showed yesterday. Yueh speaks with Maryam Nemazee on Bloomberg Television's "Countdown."
China Richest Pocketing Over $1 Trillion in Hidden Wealth
The richest people in China may be even richer than officially reported, according to a study by a Beijing-based economic think tank.
The China Reform Foundation has found Chinese households have concealed as much as 9.3 trillion yuan (about $1.4 trillion U.S. dollars) of income in 2008. This is equal to 30% of the country's GDP.
The research, sponsored by Swiss Bank, Credit Suisse, found that nearly two thirds of that unreported income goes into the pockets of the richest 10 percent.
The study was carried out by researchers who surveyed people they knew, in hopes that it would reduce the chances of lying. More than 4,000 families from 19 provinces were surveyed.
The research found that the richest 10% of households earned 65 times more money than the country's poorest 10%. Official statistics had said the difference was only 23 times.
The study suggests the grey income is usually connected with misuse of power or corruption. The sources range from stock market manipulation, property deals, large bonuses from state-owned companies and lavish gifts given to powerful officials and their relatives.
Jim Rogers on China currency policy
Jim Rogers: No economy can become world class with a blocked currency. That's never happened in history. Throughout history people with blocked currencies have eventually declined. China knows that; I'm not the only person who's read some history. They have been opening their currency for the past five years. Every quarter, every year, they open a little more. I thought they would have made it freely convertible by now. In my view, it's good for China, good for the Chinese [people], and good for the world. The sooner they make it convertible, the better.
I cannot tell the Chinese what to do; I don't want to tell them what to do. But yes, they are opening up and it has been good for the world so far. It's certainly been good for many parts of the world [that] sell to China; [they are] much, much better off than they were 20 years ago. So something has gone right. [China is] going to have to open their currency and make it completely convertible some day.
Again, I thought they would have done it by now. China doesn't have anything to worry about anymore. They are the second largest economy in the world and they have gigantic foreign exchange reserves. I don't think they should worry, but they seem to be worried for whatever reason.