Forgive my poor financial vocabulary to put this properly. I'm a Chinese in China and for now most of my money (USD earned from US, transferred to China and then exchanged into CNY) are being managed by China domestic banks with an average return of about 4% - 5% on a risk level of 2 (1 - 5, 5 being the most risky). For the last 1.5 years I've been doing this and never lost.

My question is, is this good enough or should I leave the dollars in US banks? I literally know nothing about US money markets but this has definitely drawn my attention: http://www.fundexpress.hsbc.com.hk/HSBCSite/main.aspx

China is a government-central nation so I think the money market in China is favorable towards the nation and national entities rather than civilians (people, private enterprises, etc.). In this regard, my money should be better off in US. Correct?

I currently have a 6-figure USD annual income and 6-figure cash ready for investment. Any insights and help would be very much appreciated!

  • Hi Kavoir, welcome to Money.SE! Actually 4%-5% for a low risk investment sounds pretty good to me. Low risk investments in the US are only getting 2% or less (anecdotal evidence only).
    – C. Ross
    Dec 29, 2012 at 15:39
  • 1
    @C.Ross - careful, in the US we are at near zero interest earned with about 2% inflation. If OP gets 4-5%, but the inflation is higher (5.67% last year) ycharts.com/indicators/china_inflation_rate it may be a wash. Dec 29, 2012 at 17:23
  • @JoeTaxpayer Good point, any answer should definitely take that into account.
    – C. Ross
    Dec 29, 2012 at 18:26
  • Hi there, could you clarify a few things for us? Are you based in HK or mainland China? I assume your investments in China are held in Renminbi and not in USD? Could you clarify what investments you have to earn 4 to 5% per year? Risk levels don't always give the full picture, are you using fixed term deposits? Or is your return linked to stocks and/or bonds? Dec 30, 2012 at 1:54
  • @JoeTaxpayer, thanks for the point. Based on what C. Ross provides (2% low risk annual return in US), I guess it's better off for me to leave my money in US?
    – datasn.io
    Dec 30, 2012 at 23:30

2 Answers 2


Firstly, I think you need to separate your question into two parts:

  1. Which currency should I hold my money in
  2. Which country should I hold my money in

If you are Chinese, live in China and intend to stay in China for most of your life then the default answer to question 1 should be Renminbi. Question 2 is not as important, you can hold USD in almost any country in the world.

Any investment you hold has risk, which may include market risk, credit risk, liquidity risk, inflation risk etc.

Holding USD will expose you to exchange rate fluctuations as well. If the Renminbi rises in value against the dollar your returns in USD will be reduced by the same amount (remember that for currency fluctuations you have to multiply the percentages, see here for a good explanation).

The first thing you probably want to do is find out exactly what the assets are in the 理财 you have invested in. The fact that there is a 'risk level' (even if it is only 2) would suggest to me that the fund is investing in some combination of bonds and stocks which means that your returns are not guaranteed and could make a loss.

Interest rates on deposit accounts are mandated by the government in China, and the current 12 month deposit rate on RMB is 3%. To earn over 3%, GEB must be investing your assets in something else (I'm guessing bonds). Bear in mind that 1.5 years is a very short amount of time in investments, so don't assume this return will continue! I'm afraid I've only been studying Chinese for a year, so I can't really help you much with the link you've sent through - you may want to check if there is any guaranteed minimum return, which can be the case in more complex structured products.

Ultimately you will need to pick an investment which you feel gives you the best combination of risk and return for your situation, there are a huge amount of options to choose between. The 4-5% you are earning right now is not a huge risk premium on the 3% you could earn in China from a time deposit, but in the current environment you may struggle to beat it without taking on more risk. Before considering that though - understand how much risk you already have with GEB.


You would need to look at all aspects:
- Current Rate of Interest in US compare to China
- Current Exchange rate and the rate in Future when you want the money back
- Any tax / Regulatory implications of keeping the money in US
- Any furture regulations that may hamper your access to these funds

If you are planning to stay in China and at some point in time want to get the money back, In my opinion it would make more sense to do it today like you are doing, rather than take the risk of exchange rate and regulations. Further the current low risk returns in US are near zero. The inflation in US is of no concern to you. On the other hand you have a decent return in China.

If you know that at some point in future you would need USD [either moving to US, or large purchase in USD], then it would make sense to keep the funds in USD.

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