Reasons to Open a Chinese Bank Account

It's not a floating currency, it's directly controlled by politicians. Holding yaun is taking a speculative currency bet on the competency of the Chinese Communist Party to successfully manage the Chinese economy.

Much like the tech bubble and housing bubble, by the time you read these articles in the mainstream press, it is FAR too late to invest. You've already missed 10-15 years of explosive growth in the Chinese economy.

&#62;Politically, the country is under international pressure to rein in its huge trade surplus.<p>The government doesn't feel any of this pressure, as it's not an internal issue they don't care.<p>I would argue that yes the yuan is likely to rise against the dollar, but because of high inflation (very very high in China) most assets would also rise in comparison to the dollar(Oil, Gold, Silver etc.)<p>Actually the only good reason to invest in the yuan I would think is diversification. It's not a good idea to keep your investments as cash during a time of high inflation.<p>In January 2006 Gold was $525, January 2010 it was $1125<p>Silver, January 2006 $9, 2010 $17, most assets are climbing fast in relation to cash, much faster than 25% over 5 years.

A better investment (for most people) would be in a mutual fund or index that is tied to the Chinese economy.

This is a friendly reminder that before you throw a ton of money into China, you should probably discuss this with a financial advisor. The WSJ isn't really the best place for advice as they don't know your individual risk tolerance, and listening to advice on a startup-focused forum may not be the best decision either.

OK, that’s the upside from the depositor’s point of view. What is the upside from the Bank of China’s point of view? Given the massive dollar reserves that the Chinese government has accumulated from its trade surplus, why should they sell off renminbi in exchange for even more dollars? If the RMB/USD exchange rate is almost certain to increase, why would the bank want to give up an appreciating asset in exchange for a depreciating one?

tl;dr version<p>It's very unlikely to go down.<p>It's very likely to go up.<p>You won't miss out on a lot of interest elsewhere, as nowhere else is paying a lot of interest.<p>It will diversify your portfolio.<p>And, finally, it may offer you and your family something of a hedge against the decline of the U.S. economy.

Good rundown in article. We were discussing this last night in the freenode #startups IRC channel ;)<p>The rumor is that the $20K per year investment cap is limited only to individuals and not institutional investors and funds. Furthermore, if there is massive demand, it is expected that those caps will be raised.<p>What is unclear is how your yuan can be used to make investments in China itself?

Why would China do that? They already have plenty of foreign reserves ($2.85 trillion and growing - enough to buy Spain's GDP two times over), and they seem to be struggling with inflation. I guess the Chinese government is not as sure as the WSJ that the renminbi will appreciate.

I am not an economist, but to me arguments 1,2 and therefore 5 seem specious. 3 and 4 hold water, but they are pretty self explanatory.<p>China's economy, to me, seems like a leverage play on the US. If the US economy seriously stagnates, China's economy will follow suit, and likely in a much more dramatic fashion. The opposite is also true, when the US consumers get to spending China (at least for now) stands to benefit tremendously.<p>For me, the best option if you are looking at foreign currencies, is to go buy a brazilian government bond and get 10% on your money in 3-5 years.

Looks to me like China is exporting their currency, to export their inflation, and stem the rising consumer costs in China. And I'm sure they have dreams of being the next reserve currency of the world.

Speaking of currencies, I'm wondering if anyone more intelligent than me knows what to make of this: <a href="http://research.stlouisfed.org/fred2/graph/?s[1][id]=BASE" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?s[1][id]=BASE</a><p>To my untrained eyes, it makes the idea of diversifying into anything other than the US dollar seem like a good idea. But to be honest my understanding of the US monetary system gets fuzzier the more I learn about it.

Investing in rubles ops.. yuans is very interesting proposition. Especially when inflation rate is skyrocketing and there is housing bubble of enourmous proportion. And China's economy is very much connected to US economy: if dollar collapses and yuans unpeggs, China's economy will suffer.<p>As always, great advice from WSJ: I will have one million dollar in my account in 5 years - if I start with two millions.

I know this won't be popular, but the whole idea of "diversification" has always struck me as a lame attempt by rich people (Stock brokers) to get more money from poor people. So I roll my eyes whenever a guy with a Rolex and a Porsche is telling me I need to "diversify"

Pro-tip: If you're in China, and a Bank of America customer, you can withrdraw money fee-free at the China Construction Bank. Cash may be less convenient than a Bank of China account, but, just saying.

In a rather-unrelated matter, does anyone have a Swiss bank account? I'm looking for a bank to open one in but apparently most have a 500k minimum, I just want a personal account...

"But will we start banking in a Chinese bank? It's not as crazy as it sounds."<p>Hasn't HSBC had a fairly significant US/Canada presence for a while?

Buy gold instead, for the same reasons: (1) it's very unlikely to go down; (2) it's very likely to go up; (3) you won't miss out on a lot of interest elsewhere; (4) it diversifies your portfolio; and (5) it's a hedge against the decline of the U.S. economy.

I don't understand this...are they giving you a better interest rate? Aren't they simply operating as a US bank (if they are FDIC insured). You really aren't investing in the Yuan...

May be it is a good idea for american's. I am from india and if i open an account in Chinese bank my phone will be tapped for sure!

There is something called 'gold' my friend!

Better than relying on the Fed to make the right decisions - "quantitative easing", huh?

Wondering if this is possible with a Japanese bank for Yen denominated accounts.

The Yuan is pegged to the US Dollar at around 1 yuan = 0.15 USD cents. A graph of exchange rate for Yuan/USD over time produces a horizontal line.<p>The current president 'Hu Jintau' controls the exchange rate through China's currency policy which dictates how many USD an owner of Yuan can get in exchange.<p>So buying yuan is a bet that the peg will be removed and the USD will be printed so much that nobody will exchange human labor for it.<p>It could work, but I'd buy physical gold before the yuan.