, 13 tweets, 4 min read Read on Twitter
Thread: The Bank of #China is asking customers with #US dollars to exchange them for the local RMB currency, and giving rewards to those that do. This is an indication that the trade balance is getting tight due to the #tradewar and China needs to raise more foreign currency.
Here is further confirmation that #China is short of dollars - Why is #US dollar access so restrained in China as trade war rages on? Foreign financial institutions increasingly reluctant to lend US dollars to Chinese banks because of financial risks amp.scmp.com/economy/china-…
Foreign financial institutions increasingly reluctant to lend US dollars to Chinese banks given worries about financial risks amid the trade war - China holding onto US dollars by increasingly restricting business and individual transfers out of the country.
While China’s capital controls have limited how much access its citizens have to foreign currencies at home, banks and companies are finding it harder to obtain US dollars as the trade war also hinders foreign lenders’ willingness to supply the US dollar to a slowing economy.
After Beijing’s decision to step up capital controls, analysts say, underscores the perilous state of the economy, which was also reflected by the recent reluctance of foreign financial institutions to lend to Chinese banks and the nervous behaviour of Chinese citizens.
Recent cases of individuals refused permission to buy US dollars at Chinese banks have started to accumulate. “The harder it is to get around the capital controls, the more people want to obtain dollars.”
The nation’s foreign exchange regulator, the State Administration of Foreign Exchanges (SAFE), allows every Chinese citizen to exchange and withdraw up to US$50,000 a year in foreign currency, either in a lump sum or in instalments.
But Chinese individuals and companies still face major hurdles within that quota in the examination of their applications and declarations that indicate how and when the foreign exchange purchases are to be spent.
Additionally, banks are carefully scrutinising foreign currency withdrawals of US$3,000 or more in any single transaction, down from US$5,000 previously.
Beijing is clamping down on outflows because it needs to head off the possibility of a significant economic and financial upheaval, especially if it fails to reach an agreement with the United States at the G20 meeting this month.
“China is letting very little money to go out. Every time when they try to let [money] go out, the markets get too volatile for [China] to stand and they need to stop it immediately,” said Kevin Lai, chief economist for Asia, excluding Japan, at Daiwa Capital Markets.
My take: This is big people!!! This shows how weak the Chinese economy actually is. If China makes no deal with #Trump at the #G20 Summit, then Trumps imposes 25% tariff on $300 billion of CN imports & Bang, Chinese economy in deep trouble & no money to invest on the Belt & Road.
My take 2: I've been saying for several years that the Chinese economy is a deck of cards waiting for a trigger to collapse it & the #tradewar can be that trigger. The Chinese economy is a chain of one debt bubble after another & when one bubble bursts, the chain will collapse.
Missing some Tweet in this thread?
You can try to force a refresh.

Like this thread? Get email updates or save it to PDF!

Subscribe to IndoPacific_SCS_Info
Profile picture

Get real-time email alerts when new unrolls are available from this author!

This content may be removed anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!