Economic Experts Said That China Should Prevent Foreign Reserve Holdings Of U.s. Government Bonds

Not long ago, "stock god" Buffett, referring to the behavior of the United States borrowed heavily

, particularly in reference to China, he said: "They (the Chinese) a day working hard to produce products with the Americans, and we give some of their paper. When they want to use these pieces of paper, for example, bought a few years to come a time when oil company Unocal, only to find that piece of paper can not achieve their desired goal (CNOOC bid for Unocal in 2005, because it was the United States obstruction of failure). "

This, it was said that the decentralization of China's foreign exchange reserves, the best, but some said that if the holdings of U.S. Treasuries, China is still affected by the loss, I ask, should we in the end of the holdings of U.S. Treasury bonds? For China's U.S. Treasury holdings are too many problems, there are a lot of controversy. In the U.S. Treasury April 15, 2009 published data, we can see that China once again in March 2009 holdings of 23.7 billion U.S. treasury bonds, the total holdings reached 767.9 billion U.S. dollars, continued since since September 2008 U.S. Treasury holdings of China the number of ranking first position. In the financial crisis has not yet bottomed out, the dollar continued to weaken the impact of the RMB exchange rate and so on continuously, the Chinese holdings of U.S. Treasury bonds have once again caused controversy. From the financial crisis spread and Buffett's advice, we can draw a conclusion that far from the U.S. Treasury seems to be a good choice, then we should adjust the investment strategy, it turned holdings of U.S. Treasury bonds? Why do holders of U.S. Treasuries

First of all, we have to face the fact that we currently hold large reserves. As of March 2009, China's foreign exchange reserves to 1.953741 trillion U.S. dollars. Trade surplus with the United States is an important source of foreign exchange reserves, which is to promote China's economic development one of the driving forces, from the perspective of economic history, Japan, Korea and other countries in the development of a very important point is to seize the U.S. market Similarly, China should develop the economy must seize the U.S. market. That is the long term, we hold large dollar reserves is inevitable. For a long time, it is difficult to achieve the diversification of foreign currency, and the rest of the matter is to resolve how to manage the huge foreign currency reserves of the problem.

In fact, the management of reserve assets of commercial banks with similar asset management approach, mainly reflected the "nature" principle, namely, mobility, security and profitability. In principle, we arranged a time limit to do foreign exchange reserves, reserve assets will generally be divided into three levels: (1) a reserve asset: high mobility, low income, such as demand deposits, short-term government bonds; (2 ) 2 reserve assets: both realized and profitability, such as medium-term treasury bills and bank acceptances; (3) 3, reserve assets: to meet the safety basis, mainly medium to long term investment, taking into account profitability to The purpose of adding value, such as long-term Treasury bills, A-class stocks. All of which support our theory holds U.S. Treasury bonds.

So, in reality, why the U.S. Treasury will become the first choice for China's foreign exchange reserves invested it? Mainly in the United States is the world's largest economy and has the most developed capital markets, the U.S. Treasury Bond is also came out top in the global share of. U.S. Treasury bonds, low-risk, liquidity strong euro and the yen, in comparison with the dollar area economy remains in a strong position. In this context, to buy U.S. bonds on the expected and showed up. Chinese government purchases U.S. Treasury bonds are another important reason, I believe that the focus of China to buy U.S. Treasury bonds are not on the interest rate on investments, but to stabilize their currencies against the dollar in order to protect China's exports. Because each year large quantities of U.S. Treasury bonds, can prevent the renminbi exchange rate. However, the continued appreciation of the yuan, is not conducive to China's exports. Taking full account of security conditions, investment opportunities in China's foreign exchange reserves are relatively small, the investment company of the foreign investment is still at an experimental stage, some countries have sovereign wealth fund investment to resist emotional, and I am on foreign resources and enterprises the scale of investment in the short term can never be effective, such as U.S. Treasury bonds Fandao have to make a kind of choice.

To buy U.S. Treasury bonds of the risks and benefits

Low yield U.S. Treasury bonds, but the liquid, if the U.S. Treasury as a reserve to hold, and the proper scale, we do not need to discuss whether the reduction of the problem. The current problem is that we held a large U.S. government bonds, in terms of lower yields, we should focus on consideration of its risks.

Risk U.S. Treasury holdings of China roughly three categories: the payment risk, the U.S. dollar inflation and depreciation of dollar against the yuan. For the payment risk can be considered negligible probability of its occurrence as a tool to pay the debt, dollar distribution rights in the Federal Reserve, in the revenue bond debt service ratio exceeded the level expected by the Government, or the balance of government bonds and savings deposits of residents the ratio of the principal balance of the accumulation of wealth over the corresponding micro-bearing limits, the final issue of U.S. dollar liquidity means, in this case, there is no reason to believe that the Fed will refuse to repay the note-issuing.

by: gaga

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