China disowned plans to stop buying US public debt
The Chinese authorities did not make a decision to review the practice of investing foreign exchange reserves in US government bonds. This was announced on Thursday by the State Currency Board of the People’s Republic of China (SAFE), is responsible for investing the world’s largest reserves of $ 3.1 trillion.
Bloomberg reported on Wednesday that Beijing could completely refuse or reduce the purchase of US government bonds, “is based on incorrect sources” or “is an example of fake news,” SAFE said.
The choice of facilities for investing Chinese reserves is based on market conditions, and already implemented investments, of which a third, or 1.18 trillion dollars, falls on the US national debt, “have ensured the stability of international financial markets and the safety of China’s foreign exchange reserves,” SAFE Reuters.
Similarly, the situation developed in 2009, reminds Bloomberg: after the bankruptcy of Lehman Brothers, the collapse of markets and the global financial crisis, the US marked $ 1 trillion in bonds for the quarter, and then Premier Wen Jiabao said that he was worried about the “reliability” of the US securities. A few days later, SAFE announced that Beijing will continue to buy US government debt.
Over the next 9 years, Chinese investments in treasuries grew by 60%, or $ 455 billion. The flow of Chinese ruthes in the US is the reverse side of China’s huge trade surplus: dollars are exported to the country through investments, it is difficult to find real, tangible alternatives for investing, says Amar Reganti, fixed-income strategist at GMO.
The European sovereign debt, for example, is a dubious option – the returns are negative there, and in addition – the risks are much higher risks – it is politics, problems in the banking sector and the problem of the size of the national debt: what is worth only Italian debt exceeding 132% of GDP.