It appears the great unwinding of global imbalances and the dollar's ensuing demise are notions that belong up there with the tooth fairy. China added $178bn to its foreign reserves in the second quarter, taking its total booty past $2,000bn, the equivalent of twice the annual economic output of New York

Although there are no official statistics on how China has apportioned these new reserves, US data supports the thesis that China is not yet jettisoning the dollar, however antsy Beijing gets about the greenback's global dominance. Even so, the pattern of China's reserve accumulation is changing. While China is still buying more US debt, it is not necessarily doing so with cash recycled from American consumers. The sum of China's trade surplus and foreign direct investment, the usual driver of reserve accumulation, was the lowest in three years. At around $60bn, it was also nearly half last year's quarterly average of $100bn, according to Royal Bank of Scotland. Rather, China's hoarding is being driven by hot money.

After all, China, the world's favourite green shoot, is back in bubble land; its reserve growth is just one indication of this. Estimates vary widely, but between $30bn and $70bn of speculative capital flowed into China in the second quarter. Some of that may be anticipating a possible revaluation of the renminbi. More likely are flows into real assets like property or the stock market, where volumes are running at as much as three times last year's levels. Hong Kong residents, having spent much of the past year grinding down their renminbi deposits, added more funds in May.