China's Reserve Accumulation is not Sustainable
M. Pettis, Peking University & L. Wright, Stone & McCarthy | July 15, 2008
China shocks the world and keeps adding record sums to its foreign currency reserves, already the largest in the world. ++ Such reserves are not sustainable: they are a strain on the global balance of payments, fuel rising inflation, and pose a risk for China's financial stability. ++ Accelerating reserve accumulation is the consequence of an influx of speculative money pouring into China - possibly amounting to tens of billions of dollars every month - which might eventually lead to the Chinese economy overheating.
