Re: How Does Chinese Currency Work?
I'm pretty sure that the Chinese govt. does this by offering to buy dollars with Yuan at whatever they want the price to be (I think its 9 Yuan : $1), regardless of the true market value. Since the Chinese are offering more for dollars than anyone else, the value rises to the Chinese government level.
What this means however is that China has tens of billions of dollars sitting in accounts or used to buy stuff. I have only a vague recollection of what the stuff it, but I think it includes foreign companies and US T-Bills (Government debt).
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