China bought more US debt in May despite talk of financial war amid rising trans-Pacific tensions
- China added US$10.9 billion of the US Treasury securities in May, the first purchase since February, although the US$1.08 trillion total is slightly down from 12 months earlier
- Tensions have been rising between Beijing and Washington over the coronavirus, Hong Kong and Xinjiang, with questions raised over China’s access to the US dollar
China modestly increased its holdings of US Treasury securities in May, the first in three months, despite rising trans-Pacific tensions and growing talk of a financial war between the world’s two largest economies.
The modest growth came at a time when fears are growing that confrontations between Beijing and Washington over the coronavirus pandemic, the Hong Kong national security law and Xinjiang could spill over into the financial sector.
We don't have the data of [China’s] holdings of US stocks, so it’s really hard to look at this data from a particular angle
“We don't have the data of [China’s] holdings of US stocks, so it’s really hard to look at this data from a particular angle,” said Zhou Hao, a senior emerging market economist for Commerzbank.
The latest Chinese purchase of US government debt, however, showed that Beijing has yet to use its US$1 trillion holdings as a weapon, and is not being deterred by threats from some politicians in Washington that the US should disown some or all of the debt it owes China as a compensation for its perceived initial mishandling of the coronavirus outbreak.