As much as officials in Beijing may outwardly fight it, they are still in the “dollar” business. It’s not raw conjecture, either. Though we don’t know the specifics of their policy positions, in this context we don’t need to know them; it’s all right there on the central bank balance sheet.

The most prominent thing about China right now is not its economy but its currency. CNY having spent the balance of three years dropping in often globally disruptive fashion (because it wasn’t really about China), is now hellbent for the moon. From a low of less than 7.0 to the dollar (during a one-day flash crash the PBOC went to some pains to deny ever happened even though it so clearly did), in just three months the yuan has erased more than a year of problems.

We simply don’t have enough information to piece together what is really going on over there, but it isn’t hard to guess “over there” involves a lot of Hong Kong. That shouldn’t prevent us, however, from realizing why whatever it is that is happening is happening. In this global context, that is (right now) the more important part.

The easy correlation of the “rising dollar” as it pertained to CNY was whenever it dropped, bad things happened all over the world. It was a messenger of “dollar problems” located specifically right at the basis of China’s monetary system. The PBOC’s balance sheet is built upon “dollar” assets so their sudden and often acute (August 2015, for example) disappearance was that “devaluation” that economists couldn’t ever figure out.

Therefore, a “rising yuan” would seem to be the perfect antidote. If CNY dropping is monetary deficiency, then CNY rising should be its opposite, right?

Not quite.

The past few months have seen the PBOC’s balance sheet still bleeding forex assets (“dollars”). Since the end of April (through the end of July), another RMB 102 billion has left the central bank’s books. That’s a far lower rate of decline, of course, but hardly what one might think of in light of CNY’s rocket appreciation during that time. It’s the primary clue that the currency move is artificial, an attempted manipulation rather than “dollar” market healing.