Chinese Foreign Reserves End Year Slightly Above $3 Trillion

China policymakers appear to be preferring implementing capital controls in the country instead of blazing through their massive pool of foreign exchange reserves to guard the yuan. For example, the Chinese government increased paperwork for the country’s citizens seeking to use their annual US$ 50,000 foreign exchange maximum. More strict capital controls could be underway. As the yuan depreciates, falling 4% in the fourth quarter, more money is exiting China. The ascendancy of Donald J. Trump, coupled with the U.S. Federal Reserve suddenly becoming more hawkish throws a wrench at China’s exchange-rate policy. The fall in foreign reserves is having a psychological impact.

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