Dollar flow to China slows down
China’s foreign reserves grew at its slowest pace since 2004. The central bank had less dollars to buy Treasury bonds and other foreign assets with because investment money migrating out. The nytimes reports:
China’s central bank released data on Tuesday evening showing that reserves grew by $40.45 billion, to $1.95 trillion, in the fourth quarter of 2008. That was less than half the growth in the third quarter and less than a third of the pace in the first half of the year.
While China continues to run large trade surpluses, companies and individuals have been moving savings out of the country and delaying investments into China. The reserves actually shrank $25.90 billion in October, at the height of the financial crisis, and then gained $5.03 billion in November and $61.30 billion in December, according to the central bank.
