What's going on?

Countries have savings, just like people do (or should!). And in February, China�s savings declined much less than they did in previous months – that could be a sign that it�s on a more stable footing than many had feared.

What does this mean?

China has recently spent a small fortune directly buying its own currency so that it doesn�t falltoo much in value. Such actions depleted the value of China�s savings by about $200 billion in December and January alone. But in February, China�s savings declined by �only� $30 billion. With $3.2 trillion still in its piggy bank of savings, China will maintain some breathing room if February�s drawdown can be repeated, or even decreased, in the coming months.

Why should I care?

The bigger picture: China is going to increase the amount of money in its economy – and that could weaken its currency. Right now, many Chinese people and businesses are moving money out of the country (e.g. some want their savings to be somewhere safer than China). A greater supply of yuan – due to, for example, Chinese banks to lending more money – could mean more yuan leaving the country. This would force China to take money from its piggy bank again to buy yuan to protect it from falling in value too much. Alternatively, perhaps outflows from China have already peaked and China�s savings will stabilize further.

For you personally: A stable Chinese currency is probably good for everyone. If you�re a company that sells stuff to China, you want them to be able to afford your goods. If you work at a hotel in London, you want Chinese tourists to come and stay. If you�re a real estate developer in Vancouver, you certainly want Chinese people to be able to keep using their money to buy property. If all their money was suddenly worth 30% less � which is a real possibility if their piggy bank was to keep declining at the rate it was in December and January � then your wallet would get hit too.