| ||Why Chinese Banks Are Running Out Of Dollars?
" the combined dollar liabilities at China's four biggest commercial banks exceeded their dollar assets at the end of 2018, a sharp reversal from just a few years ago. Back in 2013, the four together had around $125 billion more dollar assets than liabilities, but now they owe more dollars to creditors and customers than are owed to them."
"As for who is soaking up all the local bank's dollar assets, one culprit is China's Belt-and-Road projects, which are overwhelmingly financed in the U.S. currency, and are sending dollars overseas in the form of Chinese loans. "
But at the heart of this funding mismatch there is a simple cause: as the WSJ's Mike Bird notes, "Beijing would like to be a major financial player overseas, but few borrowers have any interest in the yuan. Most international trade is accounted for in dollars, the yuan is difficult to convert and foreign owners of Chinese assets have at best an uncertain relationship with the country’s legal system."