China's Missing FX Reserves

There is a $71 billion difference in China's forex (FX) reserves as reported by its State Administration of Foreign Exchange (SAFE), responsible for the supervision and management of its FX reserves, and the numbers reported mid-January by its central bank, notes a post by Zero Hedge.

This amounts to 3% of China's forex reserves, which if the Peoples Bank of China is to be believed, stands at $2.3992 trillion, after a 23.28% increase in 2009. China should avoid adding oil to the fire, at a time when investors and lenders, inspired by James Chanos, are pondering if the giant, overheated and opaque economy, but with two trillion in reserves, could blow.

China SAFE Data Show FX Changes Inflate Reserves By $71 Bln

This large discrepancy, according to ZH, may have resulted from:

1. Adjusting for MTM differentials.
2. A "factual" discrepancy between the two reporting agencies.
3. As SAFE is the primary custodian of actual FX data dissemination, there may have been a less than overt cash outflow, of which the PBOC was simply unaware.
4. China may not have accounted for the change in the relative value of the EUR/USD pair over 2009.

 

Comments

[flying dutchman]

While not an acronym per se, traders have dubbed Greece, Portugal and Spain "Club Med" in recent days. The term is less derogatory, but as one commodities trader pointed out to me earlier today, it sadly fails to encompass Ireland which is on the wrong bit of water.

[nesil]

Thanks, for this comment.