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People's Daily Online>>China Business

Time for China to dump U.S. debt?


10:16, October 20, 2011

BEIJING, Oct. 19 (Xinhua) -- Although China trimmed its U.S. government securities in August by a hefty 36.5 billion U.S. dollars, the country remains the United States' largest foreign lender.

The cut in August, the biggest move in at least two years, reflected concerns over safety of the Treasuries as the U.S. was stripped of its AAA credit rating, according to analysts.

The move may suggest that policymakers in the world's fastest-growing major economy are mulling over safer ways, amid the global market turmoil and the depreciating dollar, to invest its gigantic foreign exchange reserves.


The last time China dumped U.S. debt was in June, 2009, when it pared 25.1 billion U.S. dollars of Treasuries. Every month, the country will buy or sell a certain, usually moderate, amount of the U.S. government bonds.

"It's a normal investing action in the market, though it's definitely related to the fluctuation caused by the S&P's downgrade on the U.S. in August," said Guo Tianyong, economics professor with the Central University of Finance and Economics.

In August, credit rating company Standard & Poor's (S&P) lowered the United State's top-tier AAA rating for the first time since granting it. The safety of the U.S. Treasuries has thus been put in doubt, and the greenback started to fall.

Other analysts deemed the move as a natural outcome of the country's optimizing the investment structure of its foreign assets.

In recent years, China usually sold short-term Treasury bills to swap long-term bonds. The reduction of holdings this time might partly result from an array of short-term bills having matured, said Zhang Ming, deputy director of the Institute of World Economics and Politics under the Chinese Academy of Social Sciences (CASS).

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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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