Economics focus: Asian squirrels

摘要

On one economic measure at least, China has overtaken Japan: it now has the world's largest foreign-exchange reserves. The combined reserves of the People's Bank of China and the Hong Kong Monetary Authority stood at $833 billion at the end of June. By now, given their recent rate of growth, they could be nudging $870 billion-worth, most of this in dollars-well ahead of the $830 billion in Japan's coffers at the end of last month. Asia as a whole now has a stash of more than $2.5 trillion, two-thirds of the world total, up from $1 trillion in 2000. A new report, published by the International Centre for Monetary and Banking Studies in Geneva and the London-based Centre for Economic Policy Research, explodes some popular myths about the causes and likely consequences of this enormous stockpile. For instance, some American economists and politicians assert that the build-up of reserves in Asia proves that the region's governments are intervening on a huge scale to keep their currencies undervalued as part of a mercantilist strategy of export-led growth. If they let their currencies rise, it is argued, America's external deficit would shrink painlessly. By any measure, Asia's reserves far exceed its needs. However, the authors of the report dispute the claim that this growth in reserves is the product of a deliberate plan to keep currencies cheap.