China's substantial trade surplus is no longer primarily absorbed by the central bank for official reserves. Instead, private actors are now reinvesting these funds, seeking higher yields, indicating the growing role of financial markets in shaping the Chinese economy.

<p>Whereas China’s trade surplus used to be absorbed largely by the central bank and channeled into official reserves, it is now being redeployed by private actors in search of yield. This indicates China’s progress on financial deepening and underscores markets' increasingly central role in shaping the economy.</p>