Hey, big spender
ChinaFotoPress/Getty Images When U.S. Treasury Secretary Hank Paulson talks to his Chinese counterpart, item #1 on the agenda is usually the Chinese currency, the yuan. The People’s Bank of China (PBOC) keeps the yuan weak to promote Chinese exports, and many in the United States have cried foul. But keeping the yuan cheap has not been ...
ChinaFotoPress/Getty Images
When U.S. Treasury Secretary Hank Paulson talks to his Chinese counterpart, item #1 on the agenda is usually the Chinese currency, the yuan. The People's Bank of China (PBOC) keeps the yuan weak to promote Chinese exports, and many in the United States have cried foul. But keeping the yuan cheap has not been easy. The PBOC has had to accumulate a vast quantity of foreign exchange to back its currency and prevent the floods of foreign money from turning China into an inflation-ridden nightmare.
But as any entrepreneur will tell you, saving money for a rainy day is no way to turn a profit. And with over a trillion dollars gathering dust in the PBOC's vaults, China is ready to spend. At the beginning of March, China's finance minister announced that a new agency was in the works that would invest at least $200 billion of these idle funds in companies and assets abroad. From Asian stocks to African railways, the country has plenty of options, but every dollar spent is a risk taken—and China is learning that throwing money around can earn you hatred as well as gratitude.
When U.S. Treasury Secretary Hank Paulson talks to his Chinese counterpart, item #1 on the agenda is usually the Chinese currency, the yuan. The People’s Bank of China (PBOC) keeps the yuan weak to promote Chinese exports, and many in the United States have cried foul. But keeping the yuan cheap has not been easy. The PBOC has had to accumulate a vast quantity of foreign exchange to back its currency and prevent the floods of foreign money from turning China into an inflation-ridden nightmare.
But as any entrepreneur will tell you, saving money for a rainy day is no way to turn a profit. And with over a trillion dollars gathering dust in the PBOC’s vaults, China is ready to spend. At the beginning of March, China’s finance minister announced that a new agency was in the works that would invest at least $200 billion of these idle funds in companies and assets abroad. From Asian stocks to African railways, the country has plenty of options, but every dollar spent is a risk taken—and China is learning that throwing money around can earn you hatred as well as gratitude.
Check out what’s on China’s shopping list in this week’s List.
More from Foreign Policy
Lessons for the Next War
Twelve experts weigh in on how to prevent, deter, and—if necessary—fight the next conflict.
It’s High Time to Prepare for Russia’s Collapse
Not planning for the possibility of disintegration betrays a dangerous lack of imagination.
Turkey Is Sending Cold War-Era Cluster Bombs to Ukraine
The artillery-fired cluster munitions could be lethal to Russian troops—and Ukrainian civilians.
Congrats, You’re a Member of Congress. Now Listen Up.
Some brief foreign-policy advice for the newest members of the U.S. legislature.
Sign up for Morning Brief
Foreign Policy’s flagship daily newsletter with what’s coming up around the world today. Delivered weekdays.
By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. You may opt out at any time.
