InvestIdeas

Mark Hart of Corriente Capital, thinks the Chinese currency will go down 50 percent against the dollar in 2016.

“China’s banking system is approximately $30 trillion in size and the bad assets are approximately 24 percent or so. That’s $7 trillion–$8 trillion of bad assets,”

Kyle Bass estimates that $2.7 trillion of the forex reserve is tied up.

Lorenz also says a lot of the money is held in illiquid investments, like loans to Venezuela, and cannot be used to defend the currency like U.S. Treasurys, which China can sell at any time.

As of December 2015, China had $1.25 trillion in Treasury holdings, according to the U.S. Treasury.

I’ve heard estimates of anywhere from $800 billion to $1.2 trillion of its reserves might actually be illiquid,” says Lorenz. The exact compos

China stockpiled a lot of base metals and energy commodities as soon as their prices started to decline a few years ago. State-run companies thought it was a buying opportunity. Because Chinese growth has slowed and many of the commodities haven’t been used, they could now be liquidated relatively easily for dollars.