Is China quietly dumping US Treasuries?

[EV_Ares]

I very much hope that this is a false alarm:


"A sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable.

Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of US Treasuries by $48bn since late July, with falls of $32bn in the last two weeks alone.

"This comes as a big surprise and it is definitely worrying," said Hans Redeker, currency chief at BNP Paribas.

"We won't know if China is behind this until the Treasury releases its TIC data in November, but what it does show is that world central banks are in a hurry to get out of the US. They don't seem to be switching into other currencies, so it is possible they are moving into gold instead. Gold is now gaining momentum across all currencies and has broken through resistance at 500 euros," he said.

Any evidence that China was pulling out would risk setting off an unstoppable stampede, which is why such a policy would never be announced. It holds the world's biggest pool of resrves, followed by Japan."


Brad Setser, from about a month ago:


"China’s holdings of US bonds are hard to discern in a real time basis, but if China kept the dollar share of its reserves roughly constant at 70%, its $1.34 trillion in central bank reserves – along with at least another $100b stashed away in the state banks – imply that China now holds about a trillion dollars worth of US bonds."

That's an awful lot of bonds. It'd be a shame if something happened to them.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/05/bcnchina105.xml

[Xipe Totec]

1. Quiet? Hell, they threatened to do it. n/t

[aquart]

2. Now that they've got our factories....

And trade agreements with so many other countries, what do they need us for? A market? There are lots of other markets.

[Deja Q]

4. With China's reputation as it now stands? They couldn't make cheese for a starving mouse.

It'd be moldy cardboard laced with poison.

[Purveyor]

3. Could you blame them if they were? eom

[TomInTib]

5. They would be crazy to hold onto them.

Heck, there is a trillion dollars worth of sub-prime mortgages, alone.

[theoldman]

6. The Chinese never bought our bonds because they were a

good investment. The interest rates were too low. They bought our bonds to get a good grip on our balls. As any man should know you have to be nice to the guys holding your balls. As China gets stronger they will sell most of the bonds unless interest rates go up and it becomes a good investment. Never underestimate the Chinese government. They may be bastards but they are not dumb bastards. I sometimes wish I could read news where our government had done something smart.

[peacetalksforall]

7. My fantasy! China is saying (behind the curtains) don't mess with

Iran and we won't bring you crashing down.

It seems that only the MADMEN want the bombing - leaders of the U.S., Europe, and Israel (and who knows, maybe Saudi Arabia with our Congress).

[Rydz777]

8. While we are busy policing the world, we may find out that others

are getting ready to police us.

China produces 600,000 engineers a year; India 300,000. We produce 60,000. That's an indication of who will run the technology of the 21st century.