China is not dumping dollars, it’s defending the yuan

Tuesday, 19 July 2022

There’s nothing like a good old US dollar panic story. De-dollarisation is a favourite of the cultural cringers and crypto cons alike.

But, sometimes you’ve got to look at it from the other way around. So, when I read that China is dumping Treasuries hand-over-fist my ears prick up:

My own view is that this has next to nothing to with China dumping its holdings. Rather this is all about China preventing its currency from collapsing. Note that the last time we saw a similar trend was 2015 when China devalued.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.