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China Review News: China Should Purchase Strategic Materials Rather Than U.S. Debt

On November 12, 2010, China Review News published an article suggesting China use its foreign exchange reserves to purchase strategic materials instead of U.S. debt. The author explained his reasoning as follows:

According to the U.S. Department of the Treasury, at the end of August 2010, China’s holdings of U.S. debt amounted to $868.4 billion. If the U.S. Treasury yield declines by 20%, China will lose 180 billion U.S. dollars, an average loss of $138 per capita. However, China must find investment channels to maintain the value of its U.S. $2.45 trillion in foreign exchange reserves.

China should take the advantage of the low prices of energy resources and commodities in the global market and use its foreign exchange reserves to purchase materials for strategic reserve of resources, such as energy and mineral resources.

Source: China Review News, November, 12, 2010