CNY During CNY: Hongbao Havoc

A monthly webseries on China econ and finance, written, produced, and directed by Danielle Sumita.

The ubiquitous red envelope may seem innocent enough, but accommodating a billion or so hongbao exchanges puts great pressure on the Chinese banking system. After experiencing several cash crunches in 2013, the People’s Bank of China very publicly injected 255 billion RMB (42 billion USD) into the system leading up to the holiday. You care, because the inflation this caused means your holiday (cash) bonus was just a touch undervalued.

But the holiday spikes and dips of economic activity mean you shouldn’t sweat the short term. In fact, to account for seasonal distortion, even the Public Bureau of Statistics waits until March to release the economic data of January and February together. The “Jabruary” Indicators, as I like to call them, make for a more accurate depiction of the year to date.

Until then, ignore any sensationalist headlines. There are plenty of real CNY fires to be dealt with.

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