BEIJING, China - June 17, 2009 - A decision by China to reduce its U.S. Treasury holdings suggests concern about the U.S. attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday.
The remarks, coming after U.S. data showed a modest decline in Chinese investments in U.S. government bonds, were in contrast to an earlier statement in Beijing that said the recent sell-off was a routine transaction.
"China is implying to the U.S., more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," He Maochun, a political scientist at Tsinghua University told the Global Times.
According to U.S. Treasury data issued Monday, Beijing owned 763.5 billion dollars in U.S. securities in April, down from 767.9 billion dollars in March.
It was the first month since June 2008 that Beijing failed to purchase more U.S. T-bills.
Zhang Bin, a researcher at the Chinese Academy of Social Sciences, said China's move showed a more cautious attitude.
"It is unclear whether the reduction will continue because the amount is so small. But the cut signals caution of governments or institutions toward U.S. Treasury bonds," Zhang told Xinhua News Agency.
China's foreign ministry said Tuesday that its purchases of U.S. Treasuries remained based on "security, liquidity and value preservation".
For Zhao Xijun, deputy director of the Finance and Securities Research Institute of People’s University, China may have reduced its holding of U.S. Treasuries simply because it needed the money.
Zhao said the sell-off could have been in order to pay for its own economic stimulus package.
"The reduction was a result of composite factors, such as the investment need and the market change," Zhao told Global Times.