I have never taken the issue of the convertibility of Chinese Renminbi particularly personally. That is until I turned up at Beijing Airport on Monday and was told that I couldn’t convert my spare Chinese currency back into sterling, without proof of where and when I had bought it. Come on chaps, I thought, you’ve got almost $2 trillion dollars in foreign reserves – surely you can risk giving me £50?
Of course, one reason the Chinese have this vast pot of foreign reserves is precisely because they refuse to float their currency – and that has made them huge buyers of US dollar assets. Now – as America prepares to issue lots of new debt to fund the Wall Street bail-out – the Chinese are beginning to ask themselves whether holding all these US dollar assets is such a good idea? Read more