Calls for China to gradually reduce its exposure to US dollar assets are growing louder as Washington’s national debt continues to set records, reigniting persistent worries over the long-term sustainability of an investment formerly considered rock solid.
“Although US Treasuries have not yet reached the default threshold, their expansion is unsustainable,” researchers from the Bank of China wrote in the latest issue of China Money, a publication supervised by the People’s Bank of China, the country’s central bank.
With this concern in mind, China has been trimming its US Treasury holdings for three consecutive months, while keeping them roughly unchanged at the US$756 billion level in June, according to data released on Friday by the US Treasury Department. This remains the lowest level since March 2009.
