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China expresses worry over U.S. bonds

March 13, 2009

Chinese Premier Wen Jiabao said he was worried about the U.S. economy, was keeping an eye on policies in Washington and, if needed, had ammunition to help.

Wen said China would keep its goal of 8 percent growth for 2009 but sounded a cooperative if cautionary note at a news conference in Beijing, noting the U.S. economy was still the world’s largest.

If needed, we have reserved adequate ammunition. We can at any time introduce new stimulus policies, Wen said in a Wall Street Journal report Friday.

Wen also said China had lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets.

The New York Times said about $1 trillion of China’s currency reserves were invested in U.S. Treasury bonds.

Analysts said currency values are of enormous concern. The dollar has been rising for 13 months. If it turns lower, China would stand to lose.

In the short run, the dollar is appreciating, economist Bai Chong-En, Tsinghua University told the Times.

But … if the American stimulus package is financed mainly by borrowing, then that may affect the future value of Treasury securities, he said.


Source: upi



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