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China still prefers treasuries: govt advisor

(chinadaily.com.cn)
Updated: 2009-03-05 14:19

China still prefers US treasuries as one of the major investment strategies for the country's foreign exchange reserves, Reuters cited an influential Chinese Government advisor as saying on Thursday.

Related readings:  Clinton urges China to continue buying US Treasuries  China becomes biggest US treasuries holder China massively cuts dollar assets

Concerns that huge new debt issuance by the US government will erode the value of China's dollar holdings have led to calls by some in Beijing policy circles for it to diversify its foreign exchange reserves away from Treasuries, of which China is currently the biggest holder.

However, Li Yang, head of the Institute of Finance and Banking with the Chinese Academy of Social Sciences, said the global financial crisis would only reinforce the importance of seeking secure investments for China's forex reserves, according to the Reuters report.

China's forex reserves stood at nearly $2 trillion at the end of 2008.

"We are in the middle of a crisis right now, and the priority for foreign exchange reserves is to minimize losses," Li said.

"I believe that after this crisis, the percentage of US (assets) will rise," he said, emphasizing that he was expressing his personal views.