Don't hype China's US T-bond trim: economists

BEIJING -- Senior economists have argued against reading too much into China reducing its holdings of US treasury bonds in December with its biggest monthly cut in two years.

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China, the largest holder of US treasury bonds, slashed its holdings by $47.8 billion in the final month of 2013, statistics from the US Department of the Treasury showed on Tuesday.

The cut came abruptly after the country's continued raising of holdings of the bonds for three consecutive months from September to November last year.

However, on a year-on-year basis, China's holdings of US T-bonds rose about 4 percent by the end of last year to $1.27 trillion, maintaining its position as the largest foreign creditor the United States.

And experts warned against hyping the temporary drop in December, forecasting that China's holdings will remain steady in the next few years due to its enormous foreign reserve stockpile and the quality of dollar assets.

The cut is just an investment adjustment in line with domestic situations and the international economic environment and is within a rational scale of fluctuation, said Tan Yaling, president of the China Forex Investment Research Institute.

"There is no need to make a fuss about it, as either a rise or a fall in a country's holdings is normal market operations," Tan said.

As the US Federal Reserve's decision to taper its quantitative easing last December brought an upbeat note to investors, the yield of its 10-year treasury bonds surged to 3 percent, the highest since July 2011.

 

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