Beijing Blooper

Despite the cost, China continues propping up its overvalued currency. It does this by selling dollars and buying yuan. In this process, the Chinese money supply shrinks, making growth more difficult, China burns through its foreign reserves, which have already shrunk from $4 trillion to $3.22 trillion in 22 just months and exports suffer. Letting the yuan fall is anathema to the regime as it requires ceding control to markets.