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Treasury: China has record sum in US bills

CHINA'S holdings of United States Treasury securities have for the first time surpassed US$800 billion amid the nation's mounting foreign-exchange reserves and despite its talks of assets diversification.

China increased its holdings of US Treasury bills by 5 percent from April to US$801.5 billion in May, according to US Treasury data.

Jinny Yan, a Standard Chartered Bank economist, said in Shanghai yesterday: "China's increase in its US Treasury securities holdings doesn't come as a surprise.

"There are few options open for China to diversify its mounting foreign-exchange holdings."

China's forex reserves grew by 18 percent year on year to US$2.13 trillion at the end of June, making it the first country to top US$2-trillion.

Forex reserves leapt by US$177.8 billion in the second quarter, contributing a huge percentage of new reserves in the first half, which totaled US$185.6 billion.

"While China has called for a diversification of its assets, a wild fluctuation is unlikely," Yan said.

Investment on US treasury bills is safe so far, as there are no better alternatives amid the global financial market instability, experts told Xinhua news agency yesterday.

"The US dollar's role in the international monetary system is irreplaceable in the short-run," said Ding Zhijie, deputy director of the School of Banking and Finance of the University of International Business and Economics.

Ding told Xinhua there were no better investment alternatives as the world financial market was volatile in May. The US economy posted a better performance than other major economies at the time.

Chinese officials have aired concerns that the falling US dollar could hurt the value of China's massive holding of US Treasury bills.

Premier Wen Jiabao said in March that China was concerned over the outlook of US Treasuries and wanted assurance over the safety of the investment.

The US Treasury Secretary Timothy Geithner said China's US dollar assets were safe in his visit to China in June.

Chen Bingcai, researcher with the China National School of Administration, told Xinhua that China had been cutting long-term bills and buying more short-term bills to improve investment structure.


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