An official in charge of China’s foreign reserves yesterday tried to ease US concern about the political impact of Beijing’s huge holdings of US government debt.
“This is a purely market-driven investment behavior. I would hope not to see this matter politicized,” chief foreign exchange regulator Yi Gang (易綱) said at a news conference.
He was responding to a question about concerns among some US lawmakers that Beijing’s holdings of US debt pose a political threat to the US.
“China is a responsible investor and we fully believe such investments can be mutually beneficial,” Yi said.
China’s US$2.4 trillion in foreign reserves are the world’s largest and their management is closely watched by financial markets, especially as governments raise money for stimulus and struggling companies look for investment.
China is the biggest foreign owner of US government debt and some US commentators have suggested it might abruptly sell Treasurys to express anger over Tibet, Taiwan or other strains.
Beijing has never publicly threatened such a move, which would be expensive and could hurt China by causing problems in a key export market.
The Treasury market is “very important” to Beijing, said Yi, a deputy central bank governor and director-general of the State Administration of Foreign Exchange (SAFE). He said SAFE buys and sells Treasurys nearly every day.
Preliminary estimates show last year’s current account surplus — was US$284.1 billion, according to a report distributed at Yi’s news conference.
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