Do I Suggest Opening an Account with the Bank of China?
January 15th, 2011WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
The Bank of China is now allowing Americans to open yuan denominated accounts out of its New York and Los Angeles branches. Over email, several people have asked me what I think about this.
I think that keeping some portion of one’s savings in yuan makes A LOT of financial sense. The yuan is not likely to decrease significantly against the dollar. Rather, the concern among the Chinese is that, if it was allowed to fluctuate on a free-market basis, it would increase sharply in value against a number of currencies, but especially the dollar. They are keeping a lid on it, for now.
My mantra has always been diversification, diversification, diversification, so, yes, it would probably make good financial sense to park some money there.
Personally, though, I can’t bring myself to do it.
Tiananmen Square
I don’t want to spend a lot of time going through all of the reasons why not. The Chinese regime represents naked, extreme, maniac fascism of the highest order and the largest scale. Let it suffice to say that voluntarily handing over money for deposit with that regime is over the line for me. As it is, no matter how hard my wife and I try, it’s damn near impossible to avoid buying Chinese goods. The other options are to go without the things, which we do, or go with an inferior product that costs more, but that’s not made in China.
Welcome to fiat currency Hell. This is a place where, in an attempt to hold on to more of their hard earned money, well meaning, moral people are calmly considering going to the Bank of China with their savings!
Anyway, yes, it probably makes financial sense. No, I’m not doing it.
In addition to the morality of the regime in China, another issue is that at their core, they are still have communist values, which means they don’t really accept property rights. If times get rough (and they will), I wouldn’t be surprised if we start seeing asset seizures — including not just bank accounts, but entire companies as well. Just like what happened before in places like Russia, Iran, Cuba and Venezuela.
the Chinese ecoomy — and their banking/finance sector — is one of the biggest bubbles of all time. there are some parallels with Japan c.1985-1992, but the scale of the over-production and over-capacity is on a new level. they dominate low and medium-tech manufacturing. the population issues China is staring at are compounded by horrific labour conditions and unprecedented environmental degradation. train with no brakes, meet bridge to nowhere…
the criminal Chinese regime cannot keep this show on the road for much longer, imo. three or four years?