This is how the Chinese protect themselves from the trade war with America economy

Chinese companies and families increased their deposits in foreign currencies in January, indicating concerns about a possible decrease in the value of the yuan amid commercial tensions with the United States, according to Bloomberg.

According to data issued by the Chinese People’s Bank last Friday, deposits in foreign currencies at home increased by about $ 40 billion in January, the largest monthly increase since April 2021.

The data shows that both population and non -financial institutions have increased these savings.

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Fears

The rush towards converting the yuan into foreign currencies confirm fears of the low value of the local currency in the event of an escalation of the trade war with the United States, and while the yuan recovered from the lowest level in January, with the possibility of the war in Ukraine, the possibility of imposition Customs definitions mutual by the Donald Trump administration still pose a threat to the currency.

Several rounds – who reduced interest rates on deposits by Chinese banks due to poor economy – have made foreign currencies with high return more attractive to investors.

Chinese citizens may also start transferring foreign currencies in 2025, as there is a 50,000 -dollar stake that is reset at the beginning of each year, according to Bloomberg.

There is a trend to the seasonal rise in deposits in foreign currencies at the beginning of the year, and the fear of the value of the yuan increased significantly after Donald Trump’s victory in the US elections, so the high deposits of foreign currencies starting from December reflects this type of direction, “Lynn Song said. Economy experts at ING Bank in China.

“It will be interesting to see whether this number will continue to rise in February data … amid optimism about Chinese technology … and talks between the United States and Russia on Ukraine,” Song added.

Foreign currency deposits in China rose to 892.4 billion dollars, in January, from 852.9 billion dollars in the previous month.