China reported a massive increase in its huge pile of foreign currency in the first three months of this year, a gain that includes as much as $73.3 billion in unexplained new funds that has confounded experts on the Chinese financial system.
The Chinese central bank, which already controls more financial assets than any other single institution in the world, said that its foreign-exchange reserves rose $135.7 billion in the first quarter -- more than half the increase for all of last year. That raised the total to $1.2 trillion by the end of March.
The rise is far more than economists had expected -- and than can be explained by the flows of money into the country reported already. An increase in foreign reserves shows that more money is flowing into China than out of it, with the excess ending up on account with the central bank. And plenty of money is coming into China, owing in part to its export prowess.
This is getting really interesting -- and a touch scary. First, the sheer size of China's currency reserves is, well, really damn big. They have started their own "money managing" department to handle some of the account, but even then this is a ton of money.
Secondly, when money starts "appearing", I get really suspicious. While I wish that was the case (that money magically appeared), we all know better.
