China may ditch US Treasuries as decoupling risk looms: Global Times
- Beijing may gradually decrease its holdings of US Treasury bonds if tensions with Washington continue to escalate, reports the state-backed Global Times
- The sharp weakening of the US dollar amid historically low interest rates will make China more willing to sell its US debt, experts say
China could gradually cut its holdings of US Treasury securities by about 20 per cent to US$800 billion, the state-backed Global Times reported on Friday, as Beijing continues to weigh options to insulate itself from tensions with Washington.
China does not release data on the value of its US federal government bonds, but the latest figures from the US Department of the Treasury showed it held US$1.074 trillion worth at the end of June, making it America’s second largest foreign creditor after Japan.
China’s Development Research Centre, a think-tank under the State Council, said this week it was possible Washington might seize China’s holdings of US government securities if the bilateral relationship devolves into a full-on confrontation.
But of course, China might sell all of its US bonds in an extreme case, like a military conflict
Xi Junyang, a professor at the Shanghai University of Finance and Economics, was quoted as saying by the Global Times that China will “gradually decrease its holdings of US debt to about US$800 billion under normal circumstances”.