China cuts US debt holdings, widens scope
Source: Agencies/Shanghai Daily |
February 19, 2010, Friday
|
Print Edition
Print Edition
CHINA trimmed its holdings of United States debt by US$34.2 billion in December 2009, leaving Japan as the largest holder of American Treasury securities.
A US Treasury Department report on Tuesday showed Chinese holdings of Treasury bills fell by US$34.2 billion in December. That fueled concern Washington might have to pay higher interest to attract creditors to finance this year's forecast US$1.5 trillion budget deficit.
The report showed China giving up its status as top creditor to Japan, though it was still No. 2 with Treasury holdings of US$755.4 billion.
The figures "suggest that China could be more actively diversifying its currency reserves away from US Treasuries," said Jing Ulrich, JP Morgan's chairwoman of China equities, in a report. "In general, China is moving toward more active management for a portion of its foreign reserves."
Chinese leaders, including Premier Wen Jiabao, have publicly expressed concern about the health of the US economy and appealed to Washington to avoid any steps that might erode the value of the dollar and China's holdings.
China also expressed unease last year about global reliance on the dollar for trade and government reserves and proposed the creation of a new world currency.
The decline in China's holdings could reflect the global slump in trade after the economic crisis hit in 2008. China's trade surplus, a key driver of foreign reserve growth, narrowed to US$14.2 billion in January. That was less than half the global US$39.1 billion surplus a year ago.
China added just US$28 billion to its Treasury holdings last year, down from US$249.8 billion in 2008. But it said reserves rose by more than US$300 billion, suggesting money also might be making its way into Treasuries through other channels.
It took China a decade to accumulate its first US$1 trillion in foreign reserves by 2006 but growth skyrocketed as trade boomed and the total surged to US$2.4 trillion by the end of 2009.
A US Treasury Department report on Tuesday showed Chinese holdings of Treasury bills fell by US$34.2 billion in December. That fueled concern Washington might have to pay higher interest to attract creditors to finance this year's forecast US$1.5 trillion budget deficit.
The report showed China giving up its status as top creditor to Japan, though it was still No. 2 with Treasury holdings of US$755.4 billion.
The figures "suggest that China could be more actively diversifying its currency reserves away from US Treasuries," said Jing Ulrich, JP Morgan's chairwoman of China equities, in a report. "In general, China is moving toward more active management for a portion of its foreign reserves."
Chinese leaders, including Premier Wen Jiabao, have publicly expressed concern about the health of the US economy and appealed to Washington to avoid any steps that might erode the value of the dollar and China's holdings.
China also expressed unease last year about global reliance on the dollar for trade and government reserves and proposed the creation of a new world currency.
The decline in China's holdings could reflect the global slump in trade after the economic crisis hit in 2008. China's trade surplus, a key driver of foreign reserve growth, narrowed to US$14.2 billion in January. That was less than half the global US$39.1 billion surplus a year ago.
China added just US$28 billion to its Treasury holdings last year, down from US$249.8 billion in 2008. But it said reserves rose by more than US$300 billion, suggesting money also might be making its way into Treasuries through other channels.
It took China a decade to accumulate its first US$1 trillion in foreign reserves by 2006 but growth skyrocketed as trade boomed and the total surged to US$2.4 trillion by the end of 2009.
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