The People’s Bank of China announced that the it doesn’t benefit the country to increase its foreign-currency holdings. The yuan continues appreciate and China’s foreign-exchange reserves surged $166 billion in the third quarter to a record $3.66 trillion.
“It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting.
So who’s going to take care of the U.S. government’s debt?
Less intervention and smaller gains in foreign-exchange reserves may damp China’s appetite for U.S. government debt. The nation is the largest foreign creditor to the U.S. and its holdings of Treasuries increased by $25.7 billion, or 2 percent, to $1.294 trillion in September, the biggest gain since February. U.S. government securities lost 2.6 percent this year, according to the Bloomberg U.S. Treasury Bond Index. (BUSY)
Sacha Tihanyi, senior currency strategist at Scotiabank in Hong Kong, says that Yi’s comments doesn’t mean that the country will be cutting its holdings of U.S. government debt.
“They are probably going to keep their allocations reasonably stable unless there’s a big policy shift, but it means they will possibly be buying less at the margin,” (Tihanyi) said.
(via Bloomberg)
This article appears in Nov 21-27, 2013.
To all who choose to look, for the last 10 or so years, the Chinese Government has been buying natural resources around the world with US dollars, in part to reduce their exposure to our overvalued dollar. Very clever and well considered, in my opinion, as they extract raw materials from their mines or oil fields throughout the world and sell much of the finished products to us as well as the rest of the world.
The jobs associated with refining the imported ores and the manufacturing of the goods stay in China. Once upon a time, this is what America did and it became great doing so. Now, because the anti-development, fantasy-prone Democrats force unreasonable rules and regulations on all we do (EPA; Obamacare, global warming, anyone), this is the past.
We, as a country, are destined to become a beggar society, because we let the liberals export the jobs we could have, in the false belief that they are saving the planet. The recent, absolutely crazy conference in Warsaw over the illusion of man-made climate change was one giant hug-fest for these weirdoes. Next, we, the taxpayers and consumers will be paying the bill for this stupidity because the Chinese will not foot the cash for the losers in DC.
Interesting bizarro world inhabited by our friend from Bisbee.
If the boy would look a little more closely (or listen to something other than faux-noise) he would find that it was his friends in the republican and blue-dog corporate democrat ranks who sold the USAmerican people out to their corporate capitalist masters for short-term profits… There were NO “liberals” involved…
As for “becoming great”, if he means grabbing everything that wasn’t nailed down after the destruction of WWII and creating a situation where 70% of USAmericans have to take a prescription drug to get through the day (along with their non-prescribed beer and football), then I guess he’s right…
Oh yeah, and Mother Nature bats last…
ChetDude,
I believe you misread your history book. It was the USSR, not the US that did what you are saying.