About Us
Write for Us
Media Info
Advertising Info

China to dump two-thirds of U.S. debt reserves?

Monday, May 02, 2011 by: J. D. Heyes
Tags: China, U.S. debt, health news

Most Viewed Articles

(NaturalNews) Amid near-daily reports that the U.S. dollar continues to slide in value comes a report that China, the largest holder of U.S. debt, is considering dumping two-thirds of its dollar reserves, which currently stand at about $3.04 trillion.

According to a report from China's Xinhua news agency, Xia Bin, a member of the Chinese central bank's monetary policy committee, recommends Beijing reinvest its foreign exchange reserves "more strategically." He says China should lower its holdings to about $1 trillion instead.

He's not alone in making that recommendation. Tang Shuangning, chairman of China Everbright Group, says China's holdings of the dollar should be somewhere between $800 billion and $1.3 trillion, saying at a forum in Beijing that the country's current holdings are too high.

That position is further supported by Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement," and that Beijing should begin to diversity its vast pool of dollars.

So it would seem that the Chinese want to get out of the dollar business or, at a minimum, hedge their currency reserve bets by shedding greenbacks in favor of another currency - or several currencies - and other assets.

Why would they do that?

The Chinese are nothing if not shrewd capitalists, perhaps even more so than we are. While American corporations have led the world in economic growth for more than a century, China's government has had enough business acumen to become the world's second largest economy, overtaking Japan earlier this year and is on pace to overtake ours, despite some evidence to the contrary.

One analyst, Tyler Durden, writes that while China is likely weary of recycling dollars, they may not have any viable alternative - at least for now, while its own currency, remains devalued (artificially or otherwise).

"But that will all change very soon," Durden writes. "Once the push for broad Chinese currency acceptance is in play ... the USD (U.S. dollar) will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that U.S. debt is no longer a viable investment opportunity."

It's clear Chinese economic leaders are eyeing alternatives to the U.S. dollar, and why wouldn't they? The dollar has been sliding for months and many economists see its value further declining due to "quantitative easing" (printing money) policies being pursued by the Fed.

It's Economics 101. You wouldn't get rid of something of value, would you?

Receive Our Free Email Newsletter

Get independent news alerts on natural cures, food lab tests, cannabis medicine, science, robotics, drones, privacy and more.

comments powered by Disqus

Natural News Wire (Sponsored Content)

Science News & Studies
Medicine News and Information
Food News & Studies
Health News & Studies
Herbs News & Information
Pollution News & Studies
Cancer News & Studies
Climate News & Studies
Survival News & Information
Gear News & Information
News covering technology, stocks, hackers, and more