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US Treasury bonds still China's best choice (3)

(People's Daily Online)

08:12, July 24, 2012

Do not put all the eggs in one basket

Since last year, State Administration of Foreign Exchange has repeatedly stressed that taking into account the huge holding of U.S. debts, foreign exchange reserves investment should be diversified, so as to avoid the risks brought by foreign exchange devaluation.

"In addition to the purchase of U.S. debts, we can also buy some European bonds and Japanese bonds. We should not put all eggs in one basket,” Li suggested.

He said China should control growth in foreign exchange reserves, adjust the foreign exchange policy to achieve the balance of international payments and turn foreign exchange assets into real assets.

Since the debt investment incomes are generally lower than equity investments, the industry generally recommends that the future should not only reduce the proportion of U.S. debt in foreign exchange reserves investment, but also to reduce the proportion of the debt investment in the foreign exchange investment.

Experts said that despite holding U.S. Treasury bonds has certain risks, in the volatility of the global economy, the U.S. debt is almost the products that best combines safety and profitability.

Read the Chinese version at: 中国增持美债是“无奈之选”, Source: People's Daily Overseas Edition, Author: Cao Jiali and Liu Minwen


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