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People's Daily Online>>China Business

Time for China to dump U.S. debt? (3)


10:17, October 20, 2011

Zheng Xinli, permanent vice chairman of China Center for International Economic Exchanges, has suggested that Chinese companies boost overseas investment as a way to absorb trade surpluses and fend off the dollar risk.

The dependency on the U.S. Treasuries partly revealed the country's incapability to invest overseas, Zheng said. "Why did Germany and Japan not buy such a large amount of foreign bonds when they were running huge trade surpluses? That was because of their strong capability to invest overseas, which helped digest the excessive trade surpluses," Zheng said.

But the fundamental way out may lie in adjusting the country's macro-economic policies.

"China has tried various measures to slow down the growth of the foreign reserves and protect the value of its existing stock. Sadly, none has worked. With large capital inflows and a current account surplus, China's foreign exchange reserves have continued to rise rapidly," Yu said in his article.

The country must adjust or even annul those macro-economic policies that result in further accumulation of foreign exchange reserves. Only by doing this can China free itself from the "dollar trap," Yu said.

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canuk at 2011-12-05174.119.100.*
yes but...
Observer at 2011-10-26222.127.174.*
You speak of dealings with mutual respect yet you speak of your partner with the strongest ties of any partner as if they are piranhas. Sometimes the short term solutions are not the right ones. You must listen to those who have vision backwards and not so much to those who can only see forward. Do not look into the eyes of the accountant as they are not trained as those of the creative mind. Understanding the needs of your partner is the answer to mutual respect and fruitful cooperation.

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