Posted on 08/12/2007 1:21:48 AM PDT by TigerLikesRooster
China seeks to dampen US dollar rumors
BEIJING - China sought Sunday to dampen speculation it will conduct a massive sell-off of U.S. dollar holdings, with a central bank official saying the dollar remains a mainstay of its foreign exchange reserves.
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In an interview carried by the government's Xinhua News Agency, an unnamed official with the People's Bank of China said U.S. dollars and government bonds are "an important part of China's foreign reserve investments."
China's $1.3 trillion in foreign exchange reserves are the largest in the world and are believed to be comprised largely of dollar assets, potentially giving Beijing enormous sway over the dollar's value and currency markets worldwide.
A report in the British newspaper The Daily Telegraph this past week that quoted Chinese government economists as saying China would dump its dollar holdings in the event of a trade war with Washington added to jitters in stock markets already unnerved by volatility in U.S. share markets.
Xinhua said the central banker's remarks were intended to counter unspecified reports in Western media that China "is threatening to carry out a sell-off of U.S. dollars."
The Xinhua report was prominently posted on the central government's main Web site, in a further sign Beijing hoped the statement would underscore its commitment to hold U.S. dollar assets and calm investors.
"China is a responsible investor in international financial markets, and our country's foreign exchange reserves are managed with the operational goals of safety, liquidity and profit," Xinhua quoted the central bank official as saying.
The People's Bank does not disclose the composition of the foreign exchange reserves, which have swelled in recent years as China's exports surged and investors poured money into the country to profit from an economy now in its fourth straight year of double-digit growth.
But the reserves have become a political issue both within China and between Beijing and Washington. As the dollar has fallen in value, the People's Bank has come under pressure to diversify its holdings to maintain the value of the reserves and improve returns.
Washington has pointed to China's growing reserves as proof that the Chinese currency is undervalued, making Chinese exports cheap, putting American manufacturers at a disadvantage and compounding a hefty U.S. trade deficit. Several U.S. senators have renewed calls in recent weeks to punish Beijing if it does not let the currency, the yuan, rise in value.
Ping!
I think we can derive an accurate enough assessment of their intentions by their recent statements and behavior. They are certainly not a responsible "partner" nor our friend. What's next? Execute the minister of finance? Probably...
OTOH, on a personal level, I've made progress isolating goods of Chinese or questionably Chinese origin and found suitable alternatives made identifiably elsewhere if not in the USA.
How long is it going to take for some local businesses to pick up on this opportunity and make it obvious they are meeting this major consumer demand?
Here's a good link for starters: Made in the USA
It's all about price. We are long past the time when we can compete on manufacturing.
One thing I don`t really understand is why the Chinese don`t just go wild buying big ticket US items. Warning my family owns GE shares..
They could buy many of GE`s new nuclear reactor, about 2 billion per gigawatt of capacity. I mean buying 30 of them would be 60 billion. Then there is desperately needed water purification systems, waste water treatment.. China needs to spend massive on water cleanup across their nation. And we make a lot of that.
Interesting thing for the world is they either need to buy our product or prop up our dollar by investing here to keep the dollar high. They`ve chosen to invest incredibly here, and driven returns down, they look like they could go negative this year adjusted for inflation.
On the other hand if they sold off dollars or simply stopped investing so much here.. the dollar would rocket downwards. A longterm stock bear I like mentioned he thought the dollar could fall by 50%. It got me thinking you know we`d be very competitive in some areas, like car manufacturing if our dollar fell that hard.
So very true. We sit back sometimes and ask "Why?" but the real questions need to be asked of Socialist Democrats. They have created a business hostile environment with so many anti-business factions working against American industry, it's almost overwhelming.
Beginning with punitive taxation, mouth-frothing enviro-fascism, NIMBY-nuts, Corruption Union and farcical labor, minimum wage madness, sick socialist health care schemes, a twisted tort system and local anti-business bureaucracies with mountains of paperwork that impede the very thought of personal prosperity for the average American.
OK, my post has turned into a rant, but really, it's just maddening to consider the barrier they have built against business and prosperity. They absolutely do not want the average American to achieve wealth and success. That is the only conclusion you can reach when you consider all that's standing against this nation.
The fact that many of us can still overcome this opposition and achieve success speaks volumes of the greatness of our nation.
Globalism is dying. The ChiComs have a problem in that they invested in debt. A lot of debt.
Time to get over the 20th C liberal globalism and get back to strong national economies
FYI
Well said and not a rant at all. You merely feel the frustration felt by many of us who have a sound understanding of how an economy functions.
Taquiya!
I think you're right.
Yes, the statement was an error. The malfeasor could be in mortal trouble now.
They sell U.S. bonds and their export market will go in the tank. The bonds they hold would be heavily discounted and interest rates would take a significant dive, which would help the economy in the long run.
Maybe all those bonds are on hand to pay off judgments in upcoming claims for product liability.
Ingredients and components are made in China for products made in the USA. It is hard to avoid the dirtbags.
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