It will minimize the loss in China's foreign exchange reserve from the US financial crisis, if China increases its US Treasury bonds holdings, said Zhang Ming, a researcher from the Chinese Academy of Social Sciences (CASS) in his newly issued report.
The report quoted the statistics released by US economists' research, saying that China's central bank, the People's Bank of China (PBOC), bought US$50 billion in US Treasury bonds from August to October. Treasury bonds held by PBC increased to US$750 billion. Of the total balance of Treasury bonds held by foreign central banks, China's share is 35.4 percent.
China's central bank increased its US Treasury bonds holdings mainly because short-term US Treasury bonds regain investors' favor, said Zhang Ming.
However, Yu Yongding, Director of Institute of World Economics and Politics under the Chinese Academy of Social Sciences, said in an interview with 21st Century Business Herald that Chinese government should not buy any more US Treasury bonds. "The more you buy, the more you will lose," said Yu.
For more details, please read the complete story in Chinese:
(http://www.bbtnews.com.cn/political/channel/political58859.shtml)
(China.org.cn by Wu Nanlan November 10, 2008)
