Companies, individuals, investors e.t.c. are moving their money out of the yuan back into the dollar, China is selling some of its treasuries to get the dollars to give to these people. I expect the vast majority of it is leaving the country.
Isn't that against their goal of making the Yuan part of the Special drawing rights? If there are fewer Yuan internationally (and more in-country) they have a worse case for that.
The bigger hurdle to the SDR is I believe it has to be a free floating currency, which the Yuan is not. Also, I mean, what are you going to do? If people want to get their money out and you're not going to completely forbid them from doing so then you have to pay up. If you want to maintain your peg and pay up you need dollars to do it, which you have in the form of treasuries.
