http://www.forbes.com/feeds/ap/2008/10/14/ap5551330.html

China foreign exchange reserves at $1.905 trillion

China's central bank says the country's foreign exchange reserves reached $1.905 trillion at the end of September.

Reserves grew by $377 billion over the first three quarters of the year, $10 billion more than in the first nine months of last year, the central bank announced Tuesday.

However, the figures appeared to show a gradual slowdown in the rate of accumulation, a possible sign of economic jitters as the global financial meltdown begins to impact on China.

While reserves registered an average growth of about $44.5 billion per month over the first eight months, they grew by just $21.5 billion last month, according to the bank's figures.

The reason for the gap wasn't clear: Chinese customs on Monday said China's trade surplus in September hit a new monthly high of $29.3 billion, with both imports and exports growing at more than 21 percent over the same month last year.

That would appear to point to shortfalls in other sources of foreign exchange such as direct foreign investment or the outflow of so-called "hot money" - speculative money that had been targeting gains in the local currency.

China's currency, the yuan, has weakened against the dollar in recent weeks after gaining about 20 percent since Beijing revamped its foreign exchange trading system in July 2005.

Analysts believe China holds up to 70 percent of its foreign reserves in U.S. dollar-denominated assets, including Treasury securities.

Economists have warned export growth could slow radically however as demand slips in the key European and U.S. markets as a result of the global credit crisis.

Despite the strong trade showing, China's leaders have twice cut interest rates in the past two months and this week will increase the pool of money available for lending by reducing the amount Chinese banks must hold in reserve by a half percentage point to 16 percent.

A 5 percent tax on interest on bank deposits was also suspended and rebates restored to encourage exports. Economists expect additional measures including more tax reductions and a government stimulus plan to boost growth.

With housing prices cooling and fears of higher unemployment, economists have cut growth forecasts for China this year to as low as 9 percent, down from last year's 11.9 percent.

Among signs that the economic pain is being to bite, more than 52 percent of China's toy makers for export have been forced to close down this year as a result of higher labor costs and overheads, a stronger currency, and the elimination of export tax rebates.


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#1 way to ascertain that you've lost an argument: Resorting to personal attacks.

"Among signs that the economic pain is being to bite, more than 52 percent of China's toy makers for export have been forced to close down this year as a result of higher labor costs and overheads, a stronger currency, and the elimination of export tax rebates."



52%?!! Thats a lot!

" THE WAYS OF CHINA WILL BE THE WAYS OF THE WORLD!"

52%?!! Thats a lot!

Yeah, factories are closing in massive quantities. But that doesn't mean 52% loss in manufacturing capacity, it just means less efficient and smaller factories can't handle raw material increases, so they get bought up or merged with more competitive ones. It is survival of the fittest.


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#1 way to ascertain that you've lost an argument: Resorting to personal attacks.

I think China intended to close some factories. The reasons are:

1. Economy was hot.
2. A lot of low level investment that generated unneeded competition, which in return push the price unreasonable low. The unltra-low price compromise product quality and cause damage to the fane of China product.
3. The low level industries need a lot of natural resources, but they generate little added value.
4. The low level industries also cause environmental issues, the gain from these industries is evel less than the social cost.
5. Outside business environment changes. Chinese companies now dare not to send products prior to payment. The credit of western buyers is in danger in China. But before that's different.