China parliament official calls for cut in US debt holdings

[struggle4progress]

... Cheng Siwei, vice-chairman of the National People's Congress, was quoted by the Wen Wei Po as saying in Hong Kong that Beijing should stop buying US debt and cut its current holdings ...

China held 256.7 bln usd worth of US treasury debt as of the end of last year, making it the second largest holder. Last year, China's net purchases of US treasurys stood at 38.7 bln usd, accounting for half of all net purchases of US treasury bills and bonds ...

http://www.forbes.com/markets/feeds/afx/2006/04/03/afx2644229.html

[Greeby]

1. Uh-oh

Looks like China has had enough :scared:

[rooboy]

2. This was a point made a few weeks ago...

when the US was calling on China to reduce its trade surplus. Someone wryly noted that the headlines should have read "China demands US reduce its debt"

[Erika]

3. Not too comfortable in knowing who owns us n/t

[Bozita]

4. Oh shit! ... Ain't no good coming from this news

[babylonsister]

5. Will this be the final straw that wakes everyone up? If it's

reported?

[Roland99]

12. I guess it might be if China doesn't counter by buying more American-made

products (as the article reports they state they should.)

[Roland99]

6. SMW thread should be interesting tomorrow!

:scared:

[ItsTheMediaStupid]

7. Time to buy euros

This had to happen. How long did we expect them to carry us?

BTW, the subject line unfortunately applies to people with enough money to do so. The rest of us are in for a rough ride.

[Theduckno2]

8. Anybody know how 'catching' this will be?

Given the amount of US Treasury debt outstanding, will this start a significant move away from holding US debt instruments and force interest rates up?

[Zynx]

13. With a falling US dollar due to a weakening capital inflows picture,

the attractiveness of US bonds will diminish since foreing investors simply will not be able to make up the hit due to a currency decline with the meager interest payments. As such, foreign purchases of US bonds will decrease and prices will fall sending yields up and thus we will have higher interest rates.

[Theduckno2]

15. So interest rates will increase to keep US bonds attractive.

Doesn't this tend to fly in the face of those analysts that conclude that because the Fed is near the end of its interest rate increases that interest rates will level off accordingly?

Doesn't it also drive the value of the dollar down when more dollars are sent abroad by way of higher interest payments on US debt?

[Zynx]

23. Long term interest rates can rise completely independent of the fed.

The Federal Reserve could technically keep short rates at 0% and long rates could climb to 10%.

[cliss]

26. Yes, that's what I see also.

Interest rates MUST go up as a result of this, to keep investments flowing in.

Backside: the US housing market will start to sway back and forth. Lots of foreclosures. A big bubble that goes....

[kevinmc]

9. First one out of the Gate ... now the rest will follow ..n/t

[American liberal]

10. who's the first largest holder? The Saudis?

[paul_fromatlanta]

11. China just passed Japan to become first

[chrisfloyd]

17. Chinese

Chinese, then Japanese.

HONG KONG, Wednesday, March 29 — China's reserves of dollars and other foreign currencies hit $853.7 billion in February, an official Chinese newspaper said on Wednesday, allowing China to overtake Japan as the world's largest holder of foreign exchange reserves.

Japan's purchases in foreign currency markets to hold down the yen have been controversial for a quarter of a century. China's larger purchases to hold down the value of the yuan have caused similar anxieties from Washington to Brussels.

China Business News, a newspaper with close links to the government, reported that China's foreign reserves rose to $853.7 billion in February, from a previously announced total of $818.87 billion in December.

Japan, which has been doing little intervention lately, had previously reported $850.06 billion in reserves in February, barely up from $846.90 billion in December.

The latest figures show that the growth rate of China's reserves has slowed considerably in the last year, as speculative flows of money into China have faded, and that much of the remaining inflows reflect China's large and growing trade surplus.

SNIP

http://www.nytimes.com/2006/03/29/business/worldbusiness/29yuan.html&OQ=_rQ3D1&OP=71bb8419Q2FQ25qltQ25Q7CQ5Bx(yQ5BQ5B.Q2BQ25Q2BiiQ5CQ25iQ2FQ25Q2BOQ25t)(ecl((Q25qQ5ByFQ7Ct)(ecl((Q25Q2BOT)Q3CcZE.NF

[patricia92243]

21. They have a reserve, and we have a huge debt. Scary stuff. n/t

[burrowowl]

14. Ooh!oh!

Interesting! Very!

[ngGale]

16. OUCH! Oh me, oh my ...

:scared:

[BR_Parkway]

18. The likely buyers of this? Saudi Arabia and UAE - oh, and Iran

they have the cash.

Japan has been shifting out of dollars too

[katty]

25. issue has been going on for some time...bound to happen

[Hekate]

19. Was that the sound of one shoe dropping?

Now what?

Hekate

[salin]

20. But Dick tole ole W that deficits didn't matter

:eyes:

[Minnesota Libra]

22. Does anyone else see the potential for trouble here as China decides to...

....call in some of America's debt. :hide:

[Rainscents]

24. About fucking time!

China has been supporting Amerika (Bush and Neo-Cons) way too long!

[GodlessBiker]

27. Was it Marx who said that capitalists will sell us the rope we will ...

use to hang them?

[coalition_unwilling]

28. I think it was actually V. Lenin, but not sure. (n/t)