Is it wise for China to hold so much debt of US?

Is it wise for China to hold so much debt of US?
Jul 21, 2008 02:49
JIMMYB Points: Join Date: Feb 7, 2007 Status: offline	As Brad Setser (an American scientist) estimates, China holds 500-600 billions dollars of US agency paper, taking 10 percent of the outstanding stock of agency debt. Ft reports. On the other hand, Most of China's foreign exchange reserves are dollars. It seems that US to some extent just depends on China. Considering of the big quantity of American agency paper, it is a great task for China to switch into different instruments in the future. It is tough for China to replace its annual purchases of 150 billion dollars. For China, it is not a good idea to keep buying more treasuries because it might influence the incomes. As for the corporate bonds, China has to burden high risks. The great losses in Black Stone and Morgan Stanley is a good lesson for China to learn. Do you think it is wise for China to hold so much debt of US?

Jul 21, 2008 02:49

JIMMYB
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Join Date: Feb 7, 2007
Status: offline

As Brad Setser (an American scientist) estimates, China holds 500-600 billions dollars of US agency paper, taking 10 percent of the outstanding stock of agency debt. Ft reports. On the other hand, Most of China's foreign exchange reserves are dollars. It seems that US to some extent just depends on China.

Considering of the big quantity of American agency paper, it is a great task for China to switch into different instruments in the future. It is tough for China to replace its annual purchases of 150 billion dollars. For China, it is not a good idea to keep buying more treasuries because it might influence the incomes. As for the corporate bonds, China has to burden high risks. The great losses in Black Stone and Morgan Stanley is a good lesson for China to learn.

Do you think it is wise for China to hold so much debt of US?

Jul 21, 2008 08:18	#1
GARYKINKADE Points: Join Date: Jan 8, 2008 Status: Offline	Er....Uh....no. But as an U.S. citizen I didn't say that, did I? Things are going to get interesting in the future or near future, whether it's the "good, bad or ugly" of it, and we (U.S.) will mostly be on the receiving end of it.

Jul 21, 2008 17:31

YINDUFFY
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Join Date: Aug 8, 2007
Status: Offline

The stability of America is the big appeal to foreign investors. In other countries they might have to worry about the governments Nationalizing foreign holdings ( like Venezuela did to oil companies) or losing their legal rights.
An English company bought my employer after selling off holdings in Africa. Japanese bought real estate in the 1980's. Middle Eastern millionaires have huge holdings in the U.S. too.
With our system of laws and protections and the fact that every issue of money ever made in over 227 years is still redeemable at face value investing in America is a safe bet.
What if they bought bonds in Zimbabwe where now they print notes in denominations of Billions?

Jul 21, 2008 18:26	#3
MARRIE Points: Join Date: Jan 7, 2008 Status: Offline	it's too conservative for us to hold US treasury bonds for the sake of relieving the further pressure of RMB appreciation. is there any way out... fiscal surplus (bunch of reserves) is no better than fiscal deficit.

Jul 23, 2008 01:27	#4
ZOEY Points: Join Date: Nov 29, 2004 Status: Offline	Well, it seems that US just "borrows" and spends the money from other countries. It is said that the US has owed about 1 billion dollars to the UN. I am wondering if it can't afford to pay for it.

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