China should look beyond US Treasuries for ‘real assets’, central bank adviser says
Head of Chinese research unit also urges Beijing to tackle the country’s serious debt problem
China should make better use of the country’s funds by looking to invest its large capital reserves in real assets, not United States Treasury bonds, an adviser to China’s central bank said on Monday.
“We are a low-income country, but we are a high-wealth country ... We should make better use of the capital. Rather than investing in US government debt, it’s better to invest in some real assets,” Fan Gang, director of the National Economic Research Institute and a member of the People’s Bank of China’s Monetary Policy Committee, said.
Fan, speaking at the Boao Forum for Asia in southern Chinese province of Hainan, also said China’s debt load was a serious problem but that it would not lead to a financial crisis for the country because the debt was mostly domestic and China had ample savings.
He said the debt overhang was a result of previous overheating of the economy.
“This problem is serious and we need to clean house. We need to contain this financial risk, but it will not cause a financial crisis,” he said.
China’s rising debt burden has raised concerns that it could eventually trigger a financial crisis, with government officials acknowledging the challenge but vowing to contain the risks.