China’s $3 Trillion Countdown Clock

It’s very difficult to think of a really important economic issue today that is not also a geopolitical issue. The geopolitical becomes the economic. For every economic issue discussed, there’s a geopolitical face to it, and vice versa. You really need to mash up the two together.
One of the biggest convergences today between economics and geopolitics is China’s three trillion dollar countdown clock.
The first that needs to be made is that this problem used to be a four trillion dollar countdown clock, and it’s now down to three trillion. Currently, numbers have that figure slightly below three trillion when evaluating China’s hard currency reserve position. Any country has a currency reserve. Think of it like a savings account, to make it really simple. You stick it in the bank, or a brokerage account, and that’s your savings.
Countries are not that much different than individuals. They make money, and they spend money. A country that exports more than it imports is going to have a trade surplus. China is an example of this.
China sells considerably more to the world than it buys. They get paid predominantly in U. S dollars and the excess is what has been built up in the Chinese economy and its reserve position.

This post was published at Wall Street Examiner on February 16, 2017.