JCC

The Impact of a Global Recession on Asia

China reportedly has $1.95 trillion in foreign exchange reserves. It will be very difficult for them to switch from dollars.

Some say China could switch holdings into gold is not large enough to absorb more than a small proportion of China's reserves. The Euro is a FIAT currency without a central bank and therefore not safe.

If China decided to sell off some of its U.S. Treasury holdings, it would cause a slump in the Treasury market thereby reducing the remaining value of China's Treasury holdings.

As you know, China is one of the few economies that is still growing and rather robustly. Their hoard of $1.95 trillion and their requirement to be able to export forces them to pay a huge role in speeding up world and especially US recovery.

Look for a strong recovery in Chinese exports and probably much of Asis in 2010. With the US megabanks showing signs of recovery, I expect a strong world wide recovery next year.