Zhou Wenzhong, secretary-general of Boao Forum for Asia and former Chinese ambassador to the United States, talks to Henry Paulson, former US Treasury secretary, during the 2011 annual meeting of the Boao Forum for Asia, in Boao, South China’s Hainan province, April 15, 2011.
China faces high risks in holding a large amount of US Treasury bonds and should be cautious about further purchases, said economists home and abroad.
Since the moves of the US Federal Reserve System and Treasury Department have forced the dollar to decline, US Treasury bonds should have lost their charm. So, why does China continue to buy them?
China increased its holdings of US treasury bonds by 2.3 percent to $906.8 billion in October, hitting an 11-month high, Shanghai Securities News reported, citing statistics from the US Treasury Department.
China secured its largest US creditor position by purchasing US treasury bonds in September -- the third consecutive month that China increased its holdings, China Business News reported Wednesday.
Comment on "China should cut US Treasury holdings: Economist" (China Daily, July 20)
Increasing worries over a potential double-dip global recession have, however, rallied the US Treasuries market and made them the best-performing fixed-income assets.
China sold $34b in bonds in Dec; Japan becomes biggest foreign holder
The nation will continue buying US government debt but pay close attention to possible fluctuations in the value of the assets. Allure of Treasuries Set to Fade
US Treasury Secretary Henry Paulson indicated the Bush administration is willing to consider congressional plans to stem foreclosures by expanding government guarantees for mortgages.
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