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China's U.S. Treasury holdings rise

Nov. 17, 2011 at 10:38 PM   |   Comments

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BEIJING, Nov. 17 (UPI) -- China, the largest creditor to the United States, has begun increasing its holdings of U.S. treasuries with analysts supporting the move.

While China has been quite vocal lately in criticizing rising U.S. deficits and expressing concerns about the U.S. dollar, it too is following others in buying U.S. treasuries because of the worsening European debt crisis and other global economic concerns.

China's net increase in U.S. treasury holdings rose $11.3 billion in September, the largest jump since March 2010, boosting China's total U.S. debt holdings to $1.15 trillion, the China Daily reported Friday.

"This is a relatively better choice when European leaders are still suffering from the headache of a debt overload," Zhuang Jian, senior economist with the Asian Development Bank, said.

Other analysts told the Daily China should be flexible in adjusting the composition of its foreign-exchange reserves and to changing world economic conditions.

They also said the U.S. economy is recovering at a relatively faster pace than earlier this year.

In August, China had reduced is treasury holdings by $36.5 billion after the rating agency Standard & Poor's downgraded long-term U.S. debt rating to AA+ from AAA.

Economist Lu Zhengwei at the Industrial Bank Co. Ltd. told China Daily lending to the United States could provide relatively safer returns.

U.S. Treasury Department figures show Japan, the second-largest foreign holder of U.S. treasuries, increased its holdings by 2.2 percent to $956.8 billion in September, while the United Kingdom boosted its holdings to $421.6 billion in September from August's $397.2 billion.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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