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China Increases Holdings of US Assets

I think it make sense to be concerned about the hot money flows adding to the instability of China's fixed exchange rate system. More concerning, however, is that its happening at a time when China cannot afford it. China's or even Asian economic model of exporting your way to growth via fixed FX pegs ("monkey wrneching") is about to back fire. Why? well, simply because the round trip of importing commodities into China and exporting them out as goods, is getting expensive. Thats alot of extra transportation costs to house, roundtrip. At current oil prices, China and the rest of the monkey wrenchers will find their export model no longer attractive.