Treasury Secretary Scott Bessent Targets China's $2.5 Trillion Hidden Currency Reserves
US Treasury Secretary Scott Bessent, renowned for his 1992 bet against the British pound alongside George Soros, is now focusing on China's alleged currency manipulation. Currently traveling to Beijing, Bessent argues that Beijing maintains a $2.5 trillion off-balance-sheet reserve to artificially suppress the yuan, thereby keeping exports competitive. This strategy involves state-owned banks and sovereign wealth funds holding dollar assets outside the official State Administration of Foreign Exchange reserves. Although the Treasury Department previously declined to label China a currency manipulator in June 2025 due to transparency issues, experts like Brad Setser suggest the economic case for such a designation is now stronger than in 2019. Setser estimates the yuan is undervalued by approximately 20%. Bessent views this hidden financial structure as a significant problem, particularly for European economies, and links it to the broader financial framework of US tariff policies established under the Mar-a-Lago Accord. The article highlights the shift from public reserve accumulation to opaque methods by China to evade Washington's scrutiny while maintaining trade advantages.
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