$93.9b Spent to Defend Yuan After Aug 11, Lost $200b in Bailing out Stock Market

choi

The recent one first.  There is no need to read the rest of either report.

(1) Lingling Wei, 中国8月份外储下降939亿美元 因央行干预汇市. 华尔街日报, Sept 7, 2015
http://cn.wsj.com/gb/20150907/cec161109.asp

, which is an abbreviated translation of

Anjani Trivedi, China’s Forex Reserves Fall by Record $93.9 Billion on Yuan Intervention. Wall Street Journal, Sept 8, 2015.
www.wsj.com/articles/china-augus ... tervenes-1441614856

Quote:

"as it [China] intervened intensely to prop up the yuan.  The People’s Bank of China said Monday [Sept 7, 2015] that its reserves fell by $93.9 billion, the biggest-ever monthly drop in dollar terms and the largest in percentage terms since May 2012. The decline in China’s foreign-currency reserves has accelerated, deepening a trend that illustrates the pressures of the country’s slowdown, rising capital outflows and expectations for monetary tightening in the US.  China used its reserves to stabilize the yuan after the central bank devalued the currency on Aug 11

"At $3.56 trillion as of the end of August, the currency reserves held by the PBOC * * * the [China's] reserves have declined since a peak of nearly $4 trillion in June 2014 as more money leaves the country

choi

(2) Alex Frangos, China's Next Problems: Paying for Its Bailout. Wall Street Journal, Aug 31, 2015 (in the column: Heard on the Street).
http://www.wsj.com/articles/chin ... -bailout-1440953986

paragraphs :

(a) "The question is, what will the government do with all that stock that it already has bought?

"Unlike the US bailouts of 2008 and 2009, China is in the unenviable position of having bought near the market’s top, not at the bottom. Getting a TARP-like profit from its investments seems unlikely with the market so far below where much of the buying took place.

(b) "There is no official number on what the government has spent on the bailout. In early August, Goldman Sachs figured it was up to 900 billion yuan ($141 billion), with capacity for a total outlay of 2 trillion yuan.

"Count state-owned enterprises that have been forced to buy back stock, and that total might be as high as 3.5 trillion, according to investors. That doesn’t count stock that would otherwise have been sold were it not for a ban on major shareholders from selling.

"Losses of about 40% on those purchases would be 1.4 trillion yuan, spread among the various parties.

(c) "The central government [Beijing] runs a budget deficit of about 2.7% of gross domestic product and its [cumulative] debt-to-GDP ratio is less than 20%. But this is hardly the full picture. The International Monetary Fund estimates China’s 'augmented' budget deficit, which takes into account local-government borrowing, is closer to 10% a year. Augmented government debt to GDP will hit 60% this year, from 47% in 2011.