China’s preliminary 2009 balance of payments figures were published at the end of last week.
For the first time, the State Administration of Foreign Exchange has stripped out the murkiness and presented a set of figures that (i) quarterly and (ii) already adjusted for currency fluctuation.
That means the rest of the world gets to pore over data that is a little less opaque and a little more useful.
According to the figures on its foreign exchange reserves, China moved from holding $1.913 trillion of reserves to $2.399 trillion over the year.
However, the new stats show that the real accumulation, after stripping out currency fluctuation, is $389 billion.
Morgan Stanley, subtracting the new figure from the old one (an increase of $453 billion) and fiddling a bit more with the currency valuations, says this means that China lost around $43 billion on its foreign exchange investments over the year.
The bank adds that since this is a piffling amount, the bulk of China’s forex assets have probably not been marked to market prices in the accounts. Which would be consistent with the world’s nefarious accounting practices, by the way.
Morgan Stanley also calculates the amount of "hot money" flowing into China at $72 billion.
The implications? The government wants to point out, for the purposes of trade spats over tires, steel pipes, chicken feet and who knows what else, that its current account surplus fell by a third in 2009, a boon to the global economic rebalancing. Since Chinese exports fell dramatically over the year, while domestic companies snapped up as many commodities as they could lay their hands on, this makes sense.
And the idea that huge quantities of "hot money" are flowing into China and helping to inflate bubbles across the land are largely unfounded.