How much foreign reserves China can afford to lose? - Victor Shih

Victor Shih

China has been losing massive foreign assets trying to manage its unruly financial markets. Financial analyst Victor Shih believes that for Beijing, alarm bells might to off when foreign reserves go under US$3 trillion, he tells at Bloomberg. And we might be at that point fast.

Bloomberg:

Other analysts who say $3 trillion is a potential psychological trigger include Hao Hong, chief strategist at Bocom International Holdings Co., who says $2.8 trillion in reserves may already be spoken for just to cover its liabilities, and Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance. 

"There will be another psychological switch if it gets below $3 trillion yuan," said Shih, who wasn’t among the survey respondents. "I don’t think there will be panic after that, but certainly people in China especially will become more alarmed. We could be months or maybe even weeks from that point.

More at Bloomberg.

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