Edward Conard

Top Ten New York Times Bestselling Author

  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Upside of Inequality Oxford Unintended Consequences

AI Summary. The author estimates China's State Administration of Foreign Exchange holds roughly $1.8tn in dollar assets, about 55% of $3.3tn in reserves, while state commercial banks, policy banks, and the China Investment Corporation hold dollar assets outside that balance sheet. Summing these suggests China could hold more dollars off the reserve manager's books than on them.

Brad Setser Council On Foreign Relations
Date Posted:
Is Database:
Database

Setser estimates that external dollar assets of state commercial and policy banks and CIC’s dollar assets are ~ on par with the ~$1.8T held by SAFE, and concludes that China has not reduced its dollar exposure and likely has ~$4T of dollar assets.

Does China hold more dollar assets outside its official reserves than inside?

Core argument: Roughly 55% of China's $3.3 trillion in reserves, about $1.8 trillion, is a reasonable estimate of SAFE's dollar holdings, which include a sizable share of U.S. equities rather than fixed income alone.

55% of China’s $3.3 trillion in reserves is roughly $1.8 trillion. That is a reasonable estimate of SAFE’s dollar holdings (which include a decent chunk of U.S. equities; it isn’t all in fixed income). SAFE’s quarterly data shows state commercial banks had $1 trillion in dollar assets (versus $300 billion in dollar liabilities abroad) at the end of Q4, and probably more like $1.1 trillion in dollar assets now. The policy banks have an undisclosed foreign portfolio. But AIDdata estimated that they could hold close to $1 trillion in claims on the world—and most of those seem to be in dollars. And, of course, the bulk of the China Investment Corporation’s (CIC) private equity investments will be dollar-based. That suggests that the bulk of the CIC’s $450 billion in foreign assets are dollars. Sum it up, and China, Inc. could hold more dollars off SAFE’s balance sheet than on SAFE’s balance sheet.

Takeaways by Macro Roundup® AI

  1. Roughly 55% of China's $3.3 trillion in reserves, about $1.8 trillion, is a reasonable estimate of SAFE's dollar holdings, which include a sizable share of U.S. equities rather than fixed income alone.
  2. SAFE's quarterly data show China's state commercial banks held $1 trillion in dollar assets against $300 billion in dollar liabilities abroad at the end of the fourth quarter, with dollar assets probably closer to $1.1 trillion since.
  3. AidData estimated China's policy banks could hold close to $1 trillion in claims on the world, most of them apparently in dollars, and with the bulk of the China Investment Corporation's $450 billion in foreign assets dollar-based, China Inc. could hold more dollars off SAFE's balance sheet than on it.

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  • Don’t Blame America’s Current Account Deficit On the Dollar — Foreign official purchases of dollars are too small to mirror the US current account deficit, and net official financial inflows have fluctuated around zero even as the deficit widened; the euro area runs a current account surplus despite the euro's reserve role. The author argues materially reducing the US fiscal deficit is the key policy prerequisite for global rebalancing.
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