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China offloads 4.4 billion USD of US T-bonds
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12:56, June 16, 2009

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Treasury chief's debut visit on new China-US talks - special

According to data from the US Treasury Department recently released on its Web site, by the end of April 2009, China's holdings of US Treasury Bonds (T-bonds) totaled 763.5 billion USD.

Compared with China's 767.9 billion USD worth of US T-bond holdings in March, the data indicates that China has offloaded 4.4 billion USD of the US debt.

This is China's first offload of US T-bonds for more than one year. Data from the US Treasury Department showed that China's holdings of US T-bonds have constantly increased since May 2008. China has purchased around 260 billion USD of US T-bonds since then.

China's constantly increasing holdings of US debt also aroused much controversy in China. Some believe that considering possible devaluation risk, China should be cautious in purchasing US T-bonds. There are also experts arguing that purchasing US government bonds is one of the best choices for China's huge foreign exchange reserves.

In March 2009, Hu Xiaolian, Director General of China's State Administration of Foreign Exchange, said that investing in US Treasury bonds is an important component of China's foreign currency reserve investments.

But "We are naturally relatively concerned with the safety and profitability of US government bonds," she said.

Recently, an official at the State Administration of Foreign Exchange said that China was considering purchasing up 50 billion USD of bonds issued by the International Monetary Fund (IMF) "on the basis of safety and reasonable returns".

There are also reports that the Russian central bank announced last Wednesday that it was planning to reduce its US debt holdings and use that money to buy IMF bonds. On the same day, Brazil said that it will sell its US T-bonds to purchase IMF bonds.

China is not the only country that offloaded its holdings of US T-bonds in April. Several countries including Japan, Russia and Brazil have sold part of their holdings of US debt.

Among the five biggest holders of US T-bonds, Britain is the only one that continued to purchase US debt in April.

Despite the offload of US T-bonds in April, China is still the biggest US debt holder.

By People's Daily Online

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