The foreign currency is like a massive bank account in a foreign country, as long as the yuan remains strong there is no motivation to exchange the foreign reserve. China would not be hurt by a more flexible exchange rate for the yuan. So why is China building up its foreign reserve? China is creating "globally competitive multinationals" from it's state firms, in the sectors of natural resources (oil and iron) and consumer goods and high tech industries. The hope is that China firms will become global brands.[Learn More ...]

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