China has long suspected the US would eventually run the dollar printing presses overtime to get out of its financial hole, creating a dilemma for Beijing's large dollar reserves.
The frustration in Beijing over America's policy is best illustrated by comments from the director of China's Banking Regulatory Commission, who told a New York audience: "We hate you guys ? Except for US treasuries, what can you hold?"
Chinese officials have made it abundantly clear they do not want to see Washington spark inflation and lower the value of China's dollar holdings. Likewise, Beijing worries that Washington's increasing stakes in companies might further dilute shareholder equity in certain firms. Wen Jiabao, the prime minister, went public earlier this year with blunt concerns over the security of Chinese investments in the US. Calls by the governor of the country's central bank, the People's Bank of China, for a new world reserve currency add to global uncertainties over the status of the dollar.
Beijing, having long been subject to exhortations from the US over the need to revalue its currency, to rebalance its economy and to open up its financial system to US banks (the same ones that have wrought global financial destruction), feels it is on firm ground in dispensing advice over how Washington conducts macroeconomic adjustments that have an impact on China's bottom line.
But China's more assertive critiques do not amount to an imminent and radical departure from its current foreign exchange management policy. And this is despite a strategy that the State Administration of Foreign Exchange (SAFE) put in place last year to step up efforts to diversify China's foreign exchange reserves. This is only meant to reduce the proportion of its holdings denominated in dollars, estimated at about US$1 trillion (Dh3.67tn).
For several years, China had little success in meeting its goal of reducing the dollar portion of its reserves, given the sheer scale of dollar inflows through the trade accounts. That is beginning to change: for two straight quarters, China reduced its overall percentage of dollar assets, and in the final quarter of last year its euro holdings increased by more than dollar acquisitions. It is also steadily increasing its holdings of other foreign currencies.
The recent slew of overseas investments in natural resources companies is an additional element of this strategy, with Beijing permitting state-owned companies to use foreign currency reserves to support overseas investments. Outbound Chinese investments are likely to continue.
Nevertheless, SAFE is in no rush to dump dollars. Indeed, given that SAFE's equity holdings have taken a serious hit, Beijing has followed many in the well-worn flight to the safety of short-term US treasuries. For the Chinese, the resulting dollar strength (viewed on a year-on-year basis; more recently, the dollar has weakened) created trade-weighted yuan depreciation that eases pressure on Chinese exporters. Beijing, for now, is perfectly happy to maintain a de facto dollar peg. For SAFE, meanwhile, the US Federal Reserve's moves boosted the market price of China's existing long-term treasuries. Beijing has little interest in rocking the boat. These bonds are attractive, given that short-term interest rates are near zero.
Perhaps more significant than Beijing's efforts to diversify its dollar holdings is the reality that China is likely to have a smaller volume of new foreign exchange reserves to invest overseas in any market this year. As global trade collapses, its trade surplus is shrinking.
Even though Beijing is attempting gradually to diversify away from its dollar holdings, more sweeping moves to replace the dollar's hegemony at the heart of the global monetary system are neither imminent nor practicable. The central bank governor's remarks on the potential for a new monetary architecture based on an IMF-led management of special drawing rights served two purposes. First, it was an attempt to signal to domestic critics, who are unhappy about China's large dollar holdings, that the government is aware of the need to reduce its reliance on the dollar in the long term, particularly as the Fed monetises its debt. Next, China was showing an international audience that it remains open to co-operation within international financial institutions, provided Beijing is able to gain greater influence within those organisations.
At the summit meeting of the Group of 20 leading and emerging economies in London last month, China pledged $40 billion to the IMF and signalled a desire for a more prominent voice in the IMF in the form of larger voting rights. Currently, China has the same voting rights as Switzerland. In the meantime, though, and until a long-term shift out of the dollar is made that does not reduce the value of the dollar in international markets, Chinese officials will continue to mull over novel plans to reduce their dollar dependency.
The latest idea being mooted is the announcement that Brazil and China will work towards using their own currencies, rather than the dollar, in bilateral trade transactions. This might serve both countries' needs, but it is doubtful if the scheme can be widened enough to encompass bilateral payments with economies with weaker currencies. Until then, China, along with other trade-surplus countries, is stuck with the dollar.
Dr Mohamed A Ramady, a former banker, is currently a visiting associate professor in the finance and economics department at King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
More from Neighbourhood Watch:
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
The five pillars of Islam
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
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UAE currency: the story behind the money in your pockets
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Getting there
Flydubai flies direct from Dubai to Tbilisi from Dh1,025 return including taxes
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
'HIJRAH%3A%20IN%20THE%20FOOTSTEPS%20OF%20THE%20PROPHET'
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Uefa Nations League
League A:
Germany, Portugal, Belgium, Spain, France, England, Switzerland, Italy, Poland, Iceland, Croatia, Netherlands
League B:
Austria, Wales, Russia, Slovakia, Sweden, Ukraine, Republic of Ireland, Bosnia-Herzegovina, Northern Ireland, Denmark, Czech Republic, Turkey
League C:
Hungary, Romania, Scotland, Slovenia, Greece, Serbia, Albania, Norway, Montenegro, Israel, Bulgaria, Finland, Cyprus, Estonia, Lithuania
League D:
Azerbaijan, Macedonia, Belarus, Georgia, Armenia, Latvia, Faroe Islands, Luxembourg, Kazakhstan, Moldova, Liechtenstein, Malta, Andorra, Kosovo, San Marino, Gibraltar
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Champions parade (UAE timings)
7pm Gates open
8pm Deansgate stage showing starts
9pm Parade starts at Manchester Cathedral
9.45pm Parade ends at Peter Street
10pm City players on stage
11pm event ends
TO ALL THE BOYS: ALWAYS AND FOREVER
Directed by: Michael Fimognari
Starring: Lana Condor and Noah Centineo
Two stars
UAE SQUAD
Khalid Essa, Ali Khaseif, Fahad Al Dhanhani, Adel Al Hosani, Bandar Al Ahbabi, Mohammad Barghash, Salem Rashid, Khalifa Al Hammadi, Shaheen Abdulrahman, Hassan Al Mahrami, Walid Abbas, Mahmoud Khamis, Yousef Jaber, Majed Sorour, Majed Hassan, Ali Salmeen, Abdullah Ramadan, Abdullah Al Naqbi, Khalil Al Hammadi, Fabio De Lima, Khalfan Mubarak, Tahnoon Al Zaabi, Ali Saleh, Caio Canedo, Ali Mabkhout, Sebastian Tagliabue, Zayed Al Ameri
JAPAN SQUAD
Goalkeepers: Masaaki Higashiguchi, Shuichi Gonda, Daniel Schmidt
Defenders: Yuto Nagatomo, Tomoaki Makino, Maya Yoshida, Sho Sasaki, Hiroki Sakai, Sei Muroya, Genta Miura, Takehiro Tomiyasu
Midfielders: Toshihiro Aoyama, Genki Haraguchi, Gaku Shibasaki, Wataru Endo, Junya Ito, Shoya Nakajima, Takumi Minamino, Hidemasa Morita, Ritsu Doan
Forwards: Yuya Osako, Takuma Asano, Koya Kitagawa
Need to know
When: October 17 until November 10
Cost: Entry is free but some events require prior registration
Where: Various locations including National Theatre (Abu Dhabi), Abu Dhabi Cultural Center, Zayed University Promenade, Beach Rotana (Abu Dhabi), Vox Cinemas at Yas Mall, Sharjah Youth Center
What: The Korea Festival will feature art exhibitions, a B-boy dance show, a mini K-pop concert, traditional dance and music performances, food tastings, a beauty seminar, and more.
For more information: www.koreafestivaluae.com
Remaining Fixtures
Wednesday: West Indies v Scotland
Thursday: UAE v Zimbabwe
Friday: Afghanistan v Ireland
Sunday: Final
SPECS
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Blonde
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Alita: Battle Angel
Director: Robert Rodriguez
Stars: Rosa Salazar, Christoph Waltz, Keean Johnson
Four stars
What went into the film
25 visual effects (VFX) studios
2,150 VFX shots in a film with 2,500 shots
1,000 VFX artists
3,000 technicians
10 Concept artists, 25 3D designers
New sound technology, named 4D SRL
What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
ADCC AFC Women’s Champions League Group A fixtures
October 3: v Wuhan Jiangda Women’s FC
October 6: v Hyundai Steel Red Angels Women’s FC
October 9: v Sabah FA
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
