Thu, Jun 17, 2010 page11

• Beijing’s holdings of US Treasuries hits 2010 high

  • AFP AND REUTERS
  • • 
    • 
    • 

  China’s holdings of US debt has climbed to the highest level this year, the US Treasury said on Tuesday, even as Beijing stepped up attacks on the US for its burgeoning debt.

  The cash-rich Chinese government raised its US Treasury bond holdings to US$900.2 billion in April, its highest level since November last year, while posting the second consecutive monthly rise, a report on international capital flows said.

  China remained far ahead as the top foreign debt holder, followed by Japan, which held US$795.5 billion in April, and third-placed Britain at US$239.3 billion, the figures show.

  The monthly gain in April and the previous month came after six straight months in which China appeared to reduce its Treasury holdings, or keep them flat.

  While that triggered concerns Beijing was diversifying away from US bonds, some analysts said China was secretly buying bonds via third countries to mask its importance as a creditor — a role which had attracted considerable scrutiny.

  Globally there has been an influx of investments in recent months into US Treasury bonds — a channel used by the government to borrow from the public to finance its burgeoning deficit — amid the mounting European debt crisis.

  The crisis, which sent the euro to four-year lows, also deterred China and several other countries with massive foreign reserves from diversifying away from US bonds and other long-term US securities, analysts said.

  “Threats of reserve diversification over the last two years by China and Russia have ended since the breakout of the European sovereign debt crisis and the euro’s [sharp] decline against the US dollar,” said analyst Michael Woolfolk of Bank of New York Mellon.

  The data on Tuesday indicated that China remains “a steadfast buyer” of Treasuries, averaging US$10.3 billion per month last year and US$8.2 billion per month for the first four months of this year, he said.

  China, the world’s largest holder of foreign-exchange reserves, has been constantly criticizing Washington for its snowballing debt levels, fearing that Beijing’s investment in US government bonds could turn sour if a debt crisis overwhelms the US.

  The latest US Treasury data showed that net foreign purchases of US securities rose in April, but at a slower pace than record-setting March levels.

  Net long-term foreign purchases fell to US$83 billion from US$140.5 billion in March.

  “Despite falling from their ­record-high March level, net long-term capital inflows to the United States remained solid,” Gregory Daco, a US economist at IHS Global Insight said.

  “Foreign investors’ confidence in the US recovery was illustrated by the increased holdings of all three largest foreign holders of US Treasuries: China, Japan and the UK,” he said.

  Meanwhile, the IMF’s top economist said it is in China’s interest to revalue its currency, and from the point of view of the rest of the world, it should happen as soon as possible.

  “Some sectors in China are overheating and workers are demanding more pay. They [authorities] don’t want the inflation risk to grow,” IMF chief economist Olivier Blanchard said in Finnish business paper Kauppalehti yesterday.

  “I don’t know when and by how much the yuan will be revalued, but I believe it is in their [China’s]interests. For the rest of the world it is important that it happens as soon as possible,” he said.
• Most Popular

  • 1

    TSMC and Nvidia team up on silicon photonics, CEO Jensen Huang says

  • 2

    Master sergeant killed after being sucked into engine

  • 3

    TikTok could be affecting views of young Taiwanese

  • 4

    Dozens injured after quakes damage buildings

  • 5

    Tourist faces a fine after being struck by a train