International

China cuts dollar holdings

In this October 16, 2009 photo, a bank clerk counts $100 bills near bundles of Chinese renminbi notes at a bank in Hefei, in central China's Anhui province. A decline in China's declared holdings of U.S. Treasury bills comes as it is trying to diversify its foreign assets.  

Concerned over the United States' growing budget deficit, China has reduced its holdings of U.S. debt by $45 billion in the past five months and is now no longer Washington's biggest creditor.

According to U.S. Treasury data released on Tuesday, Beijing sold as much as $34 billion of its dollar assets, of which it holds $755.4 billion, in December alone. China's shedding of its American assets has now left Japan as the biggest foreign holder of U.S debt.

China became the U.S.'s biggest creditor in September 2008. Beijing has since exerted unprecedented influence over the U.S. economy and has also increasingly voiced concerns over Washington's fiscal policies.

In recent months, economists in China have been pressing the government to reduce its holdings of U.S. treasuries, particularly in light of concerns over the U.S.' rising budget deficit, forecast to reach a record $1.56 trillion this year.

Even as early as last March, Premier Wen Jiabao said Beijing was “concerned” about the U.S. budget deficit and the safety of China's dollar assets, while the governor of China's central bank called for a new reserve currency to replace the dollar.

Since Mr. Wen's statement last March, China appears to have steadily reduced its dollar assets. In the last five months, China has sold $45 billion of its holdings, according to Alan Ruskin, chief international strategist for RBS Securities.


Our code of editorial values

null
This article is closed for comments.
Please Email the Editor

Printable version | Oct 20, 2021 11:32:50 PM | https://www.thehindu.com/news/international/China-cuts-dollar-holdings/article16815468.ece

Next Story