09/18/2010

China buys $3-b US treasury bonds

BEIJING: China has bought $three-billion more worth of US treasury debt and expanded the scope of imports from the US in what are seen as measures that will result in the yuan appreciating against the US dollar — a key demand of the Obama administration.

China’s holdings of treasury bonds rose $846.7 billion in July after two months of decline, the state-run China Daily has reported.

The news allayed concerns that Washington’s largest creditor China was moving away from investing in dollar assets, it said.

Coincidentally, the debt data came out at the same time as two congressional hearings were being held in the US on China’s exchange rate policy of pegging the value of Yuan far lower to dollar than its perceived strength.

The US Treasury Secretary, Mr Timothy Geithner, called for “a significant and sustained appreciation of the yuan over time” and “a more balanced economic relationship” but did not back the demand for trade sanctions against China.

China’s increased investment in US treasuries “helps bolster the US financial market. The yuan has become more flexible and risen by about 1.6 per cent since mid-June despite hurting Chinese exporters and domestic jobs,” the Daily said in its edit orial today.

“The two factors indicate that China values a stable US and global economy and is committed to reforming the yuan’s exchange rate regime,” it said. — PTI

The Hindu Business Line

Sep 18, 2010 10:25:29 AM | Current Affairs, Finance

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