mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Thu Feb 12, 2009 10:50 am Post subject: ..."We hate you guys" |
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http://www.ft.com/cms/s/0/a403d716-f8a6-11dd-aae8-000077b07658.html
The Chinese aren't so happy with their investments in US government bonds:
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China to stick with US bonds
China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its "only option" in a perilous world, a senior Chinese banking regulator said yesterday.
China has used the dollars it accumulates selling manufactured goods to US consumers to accumulate the world's largest holding of Treasuries.
However, the increasing US budget deficit and its potential impact on the dollar have raised questions about the future Chinese appetite for US debt.
Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York yesterday that China would continue to buy Treasuries in spite of its misgivings about US finances.
"Except for US Treasuries, what can you hold?" he asked. "Gold? You don't hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option."
Mr Luo, whose English tends towards the colloquial, added: "We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do."
However, Mr Luo said Chinese officials would encourage its banks to finance domestic mergers and acquisitions rather than provide rescue finance to distressed financial companies in other countries: "There will be no bottom-fishing of financial institutions, particularly in the US, because there is a lot of uncertainty about the quality of the books."
Mr Luo said China intends to maintain its separation of investment and commercial banking based on its observations of the US after repeal of the Glass-Steagall Act that enforced a similar division of banking activities.
"To some extent, Glass-Steagall has fuelled the crisis," Mr Luo said. "The separation of commercial and investment banking is likely to stay longer [in China] than before." Like senior financial officials in other developing nations - such as Mohammad Al Jasser, vice-governor of the Saudi Arabian Monetary Agency - Mr Luo also spoke out against what he called America's laissez-faire capitalism.
"Government ownership was viewed as something negative but the pendulum is swinging the other way. Perhaps banking is [no different from] public utilities where government participation is necessary," he said.
"Deregulation in the US has gone a little bit too far. The market can't be omnipotent." |
Ok, maybe the title of the OP rests on a translation issue, but is still interesting.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_dsDz145J_A&refer=home
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Feb. 11 (Bloomberg) -- China should seek guarantees that its $682 billion holdings of U.S. government debt won�t be eroded by �reckless policies,� said Yu Yongding, a former adviser to the central bank.
The U.S. �should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,� Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.
Benchmark 10-year Treasury yields climbed above 3 percent this week on speculation the government will increase borrowing as President Barack Obama pushes his $838 billion stimulus package through Congress. Premier Wen Jiabao said last month his government�s strategy for investing would focus on safeguarding the value of China�s $1.95 trillion foreign reserves.
China may voice its concerns over U.S. government finances and the potential for a weaker dollar when Secretary of State Hillary Clinton visits China on Feb. 20, according to He Zhicheng, an economist at Agricultural Bank of China, the nation�s third-largest lender by assets. A People�s Bank of China official, who didn�t wish to be identified, declined to comment on the telephone. |
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