Thursday June 18, 10:27 AM
China "may buy more US Treasuries"
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BEIJING (AFP) - China may buy more US Treasury bonds but Washington must take action to ensure the safety of foreign countries' assets, a former Chinese central bank governor said.
"In the short term, if our foreign exchange reserves rise and the US dollar remains stable, China will probably increase investment in the US Treasury bonds at appropriate times," said Dai Xianglong in an essay.
"However, the US government should adopt practical measures to live up to its commitment to ensuring the safety of foreign assets," the essay, published by the China Finance (CHFI.OB - news) magazine Wednesday, said.
Dai is currently chairman of the Social Security Fund, China's national pension fund, which had a total asset value of 563 billion yuan (82.3 billion dollars) by the end of 2008.
Dai, 64, was governor of the central bank from 1995 to 2002, helping to steer the Chinese economy through the Asian financial crisis in the late 1990s.
His comments came after China reduced its US Treasury holdings in April for the first time in nearly a year.
According to some local experts, this reflected rising concern that the value of Chinese assets could be battered by a growing US budget deficit.
According to US Treasury data issued Monday, Beijing owned 763.5 billion dollars in US securities in April, down from 767.9 billion dollars in March.
China's foreign exchange reserves, the world's largest, stood at 1.95 trillion dollars at the end of March, official data showed.
More than 1.5 trillion dollars in the reserves are held in US securities, including agency and corporate bonds as well as equities, according to the latest estimate by Standard Chartered (LSE: STAN.L - news) .
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