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Written by admin on May 15th, 2009

China Reduces Purchases of US Debt

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It appears that China has grown wary of the troubles that are plaguing the United States economy. According to certain sources, among them, a US congressman, the Chinese government has started to reduce its purchases of US debt.

With the world’s largest foreign reserves-the majority of it being in dollars and US Treasury bonds, China has more than any other country around the world. The new figures are part of the latest data collected by the Treasury Department that highlight how Chinese investors have curtailed their purchases of bonds in both January and February of 2009.

The concerns are very legitimate ones says Rep. Mark Kirk, a member of the House Appropriations Committee and co-chair of an organization of legislators promoting economic relations with Beijing.

In a discussion with The Committee of 100, a Chinese American group, Kirk said, “It would appear, quietly and with deference and politeness, that China has canceled America’s credit card.” He went on to say that, “I’m not sure too many people on Capitol Hill realize that this is now happening.”

Kirk also cites Chinese investor concerns based on the performance of Fannie Mae and Freddie Mac, both of which were recipients of federal aid because of the economic crisis.

There is a growing amount of concern among Kirk and others about the methods used to trade bonds and with the Federal Reserve buying up debt. Foreign investors are starting to move out. It is a trend that might become a real cause for concern should China remains distant and hesitant to participate.

In fact, with China’s economy also suffering under the global economic crisis, Premier Wen Jiabao has openly voiced concern about the status of his country’s investments in the United States.
There are even rumors that the China has been considering a change from the dollar to some other international currency. It is a move that could spell the end of the dollar.

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3. US Dollar Experienced Increases By Sales On Bonds
4. Another U.S. Debt Purchase In The Works
5. Government Debt Auctions Influencing Strength Of The Dollar