China Selling US Treasury Bonds
This is the point where we have to wonder if this is the beginning of the end.
The shrewd Chinese have not sustained such high growth rates by being dummies, and they are looking with doubtful eyes to the current US government on whether or not we can resolve our crisis. The current plans do not look fruitful not to mention we have to truly consider whether we could have even expected the US economy to exist as it has traditionally existed, without change; that view now seems naive.
We are looking at a situation where the confidence in the US economy is eroding:
Chinese premier Wen Jiabao has said he is ‘a little bit worried’ about the safety of his country’s investments in US bonds. Photograph: Greg Baker/AP
China sold $34bn (£21.5bn) worth of US government bonds in December, raising fears that Beijing is using its financial muscle to signal that it has lost confidence in American economic policy.
US treasury figures for the period ending in December 2009 show that, following the sale, China is no longer the largest overseas holder of US treasury bonds. Beijing ended the year sitting on $755.4bn worth of US government debt, compared to Japan’s $768.8bn.
Since the sub-prime crisis that began on Main Street USA grew to engulf the global economy, China’s leaders have repeatedly expressed concerns about US policy. December’s $34bn sell-off made only a tiny dent in Beijing’s total holdings of US assets, which amount to well over $1tn when stakes in American companies, as well as treasury bills, are taken into account.