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China: Beijing buys more US debt
China Daily ^ | 09/18/10

Posted on 09/18/2010 12:41:17 AM PDT by TigerLikesRooster

Beijing buys more US debt

By Wang Bo and Tan Yingzi (China Daily)

Updated: 2010-09-18 07:36

BEIJING/WASHINGTON - China increased its holdings of United States treasury debt in July after two months of net sales and economists say it is unlikely Beijing's appetite for US assets will fade in the near future as two of the world's largest economies become increasingly interdependent.

China's holdings of treasury bonds rose slightly to $846.7 billion in July after two months of declines, the US Department of Treasury reported on Thursday.

The news allayed concerns that Washington's largest creditor was moving away from investing in dollar assets.

Coincidentally, the debt data came out at the same time as two congressional hearings were being held in the US on China's exchange rate policy. The hearings were attended by Treasury Secretary Timothy Geithner, who called for "a significant and sustained appreciation of the yuan over time" and "a more balanced economic relationship".

Economists said the ongoing debate over China's exchange rate and fears about dwindling demand for US treasuries reflected increasing interdependence between the US and China, which is likely to become the world's second largest economy this year.

In the testimony to the hearing at the House Committee of Ways and Means, Geithner acknowledged that the two countries "have significant economic interests" in their relationship and highlighted the importance of the Chinese market on the US economic recovery.

"A strong and growing China benefits the US, just as a strong and growing US is good for China," Geithner said.

During the first seven months of this year, US exports to China surged 36 percent year-on-year. At the same time, China's exports to the US grew by 21 percent.

China has become the US' third-largest export market and now accounts for 6.8 percent of the country's total overseas sales.

Yao Jian, the Ministry of Commerce spokesman, said on Wednesday the two economies are highly complementary and pledged to boost bilateral economic ties by purchasing more goods from the US.

Yao said a Chinese trade delegation led by Wang Chao, the vice-minister of commerce, is visiting the US and seeking trade and investment opportunities in the energy and technology sectors.

Given the uncertain global and European economic prospects, however, China is not likely to make major adjustments to its US debt investments, predicted Zhang Xiaojing, an economist with the Chinese Academy of Social Sciences.

"China's holdings of US debt may not fluctuate much in the coming months," Zhang said.

And economists said the fact that China had bought more treasury bonds does not mean it has stopped diversifying its foreign exchange reserve portfolio.

China has been a major buyer of Japanese debt this year, having snapped up $27 billion worth in the first seven months. It also doubled its holdings of South Korean debt, to $3.4 billion in the first half of this year.

"Though there is no direct relationship between China buying into the yen and dumping dollar assets during the past few months, it was a good option to diversify the country's colossal foreign exchange reserves on the debts of countries with strong trade ties to China," said Jinny Yan, an economist at Standard Charted Bank.

Experts also noted that it is essential to make sure that cooperation between China and the US is not derailed by exchange rate disputes.

"If the benign relationship in economic areas is dampened due to the exchange rate rift, it is highly likely that there will be a negative impact on China and US cooperation in other crucial areas, such as security and diplomacy," said Shi Yinhong, a senior scholar in American studies at the Beijing-based Renmin University of China.

"China and the US maintain a relatively low level of cooperation and limited strategic trust on security issues. The increasing interdependence of China and the US is mainly in the area of economy and finance," he added.

Wang Bo reported from Beijing. Tan Yingzi reported from Washington. Ding Qingfen and He Wei contributed to this story.


TOPICS: Business/Economy; Foreign Affairs; News/Current Events
KEYWORDS: china; dollar; tbill; us

1 posted on 09/18/2010 12:41:20 AM PDT by TigerLikesRooster
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To: TigerLikesRooster; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; ...

P!


2 posted on 09/18/2010 12:42:07 AM PDT by TigerLikesRooster (The way to crush the bourgeois is to grind them between the millstones of taxation and inflation)
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To: TigerLikesRooster

Suckers!


3 posted on 09/18/2010 12:49:05 AM PDT by unkus
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To: TigerLikesRooster

Do they really have faith in us still or do they just want to make sure they have the vice grips locked on our nether regions?


4 posted on 09/18/2010 1:17:47 AM PDT by TigersEye (Greenhouse Theory is false. Totally debunked. "GH gases" is a non-sequitur.)
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To: TigerLikesRooster

just wondering, whats the process in which we default on the chinese debt. Does it just take the president to do it? Does it require congress?


5 posted on 09/18/2010 1:49:54 AM PDT by 4rcane
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To: TigerLikesRooster
We'll experience shortages until domestic production (or other offshore source) catches up.. what about Red China?

If Red China's U.S. market disappeared and unemployment in Red China increased by a factor of.. oh I don't know.. 10? What would happen with an already serious problem?

"China’s communist regime is launching special training classes for Party officials on how to handle 'anti-government' protests. The move comes as political unrest is on the rise. China’s National Bureau of Statistics says police forces handled nearly 600000 cases of protests and demonstrations in 2006, the last year for which data was released. That’s a 6-fold increase from 2005, and authorities expect these numbers to keep growing. The anti-protest training seminars began after the October mass riots in Shanghai resulting from the execution of Yang Jia—a victim of police abuse. The seminars teach Communist Party officials how to calm protestors with pre-scripted phrases. But it’s unclear whether it will address widespread concerns, such as illegal land seizures, police abuse and a lack of religious and political freedom."

One-minute video here Political Unrest on Rise in China (I did not view the video)

Interesting comments from over there in that region of the world.

6 posted on 09/18/2010 3:37:46 AM PDT by WilliamofCarmichael (If modern America's Man on Horseback is out there, Get on the damn horse already!)
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To: TigersEye

Isn’t there a verse in the Bible that says that the person who owes money is a slave to the person he borrows from?


7 posted on 09/18/2010 3:53:02 AM PDT by rovenstinez (,)
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To: TigerLikesRooster

This is humiliating,and it is also dangerous.


8 posted on 09/18/2010 4:57:11 AM PDT by Malesherbes (Sauve qui peut)
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To: WilliamofCarmichael

You should begin thinking Chicap to reflect the current reality and abandon the increasingly archaic Chicom.

China is. The isolationist fear of the Maoists has been abandoned and business and science and academic Chinese are entering the affairs of the world on an ever increasing scale.

There are lots of American jobs provided in the pipeline moving /Chinese products and making and moving products to China.


9 posted on 09/18/2010 5:23:46 AM PDT by bert (K.E. N.P. N.C. +12 ..... Greetings Jacques. The revolution is coming)
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To: TigerLikesRooster

10 posted on 09/18/2010 5:34:18 AM PDT by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: TigerLikesRooster

The Communists have the money, and the Capitalists don’t. Go figure.


11 posted on 09/18/2010 5:37:46 AM PDT by Wolfie
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To: Wolfie
What is the security for their loans?

Are we all going to have to post:

NOTICE TO CREDITORS
"I will not be responsible for any debts or obligations contracted by the United States of America"

12 posted on 09/18/2010 6:01:48 AM PDT by trickyricky
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To: rovenstinez

I think so. Shakespeare warned; neither a borrower nor a lender be. Both admonitions sound wise to me.


13 posted on 09/18/2010 6:46:51 AM PDT by TigersEye (Greenhouse Theory is false. Totally debunked. "GH gases" is a non-sequitur.)
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To: Wolfie

And it only took the democrats sixty years to get us this point.


14 posted on 09/18/2010 8:19:45 AM PDT by Vaduz
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To: TigerLikesRooster; stephenjohnbanker; M. Espinola; Quix; EggsAckley
Music Video: 'Buy, Buy American Pie'

Enjoy! . . . LOL, LOL !

15 posted on 09/18/2010 9:53:07 AM PDT by ex-Texan (Ecclesiastes 5:10 - 20)
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To: bert

Thank you for the advice.. as long as the Communist Party is the supreme authority it is and always will be Red China and the Chi-Coms.


16 posted on 09/18/2010 11:02:47 AM PDT by WilliamofCarmichael (If modern America's Man on Horseback is out there, Get on the damn horse already!)
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To: WilliamofCarmichael

I guessed that would be the case :)


17 posted on 09/18/2010 11:29:15 AM PDT by bert (K.E. N.P. N.C. +12 ..... Greetings Jacques. The revolution is coming)
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To: TigersEye

Do they really have faith in us still or do they just want to make sure they have the vice grips locked on our nether regions?


They really don’t have a choice. Who else is going to take all the dollars we are shoveling their way?


18 posted on 09/18/2010 11:39:33 AM PDT by PeterPrinciple ( Seeking the truth here folks.)
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To: PeterPrinciple

The Chinese don’t have a choice?


19 posted on 09/18/2010 3:54:24 PM PDT by TigersEye (Greenhouse Theory is false. Totally debunked. "GH gases" is a non-sequitur.)
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To: TigerLikesRooster; ex-Texan

Now operating 24 hours a day, every day, including all holidays.


20 posted on 09/18/2010 4:37:55 PM PDT by M. Espinola (Freedom is never "free")
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