China Slows Purchases of U.S. and Other Foreign Bonds

[steven johnson]

Looks like we are going to have to find other buyers for our bonds. Our dependency on China may be dwindling.

HONG KONG — Reversing its role as the world’s fastest-growing buyer of U.S. Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released this weekend by China’s central bank.

China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years. For the quarter, the reserves edged up $7.7 billion, compared to a record increase of $153.9 billion in the same quarter last year.

China has essentially lent vast sums to the United States — roughly two-thirds of the central bank’s $1.95 trillion in foreign reserves are believed to be in American securities. But the Chinese government now finances a dwindling percentage of new American mortgages and government borrowing.

Private investors from around the world, including the United States, have been buying more American bonds in search of a refuge from global financial troubles. This has made the Chinese government’s cash less necessary and kept interest rates low in the United States over the winter despite the Chinese pullback.

China Slows Purchases of U.S. and Other Foreign Bonds

[madrchsod]

1. it`s about time we stopped selling our debt to china

devalue the dollar and we`ll not have to worry about cheap shit from china

[amandabeech]

2. Right now, China pegs its currency to the dollar.

If we devalue, so do we.

I have to wonder if at some point, China will at least peg its currency to a basket of others, including the yen and the euro.

If China doesn't, I think that there may be yet another move to slap an equalizing tariff on Chinese imports.

If we are less beholden to them to purchase our securities, then we would have less fall out from taking actions that benefit us and do not benefit them.