China Review News Agency carried an article titled, “Why China Is No Longer the Largest Holder of U.S. Debit.” The article said that, in February, Japan surpassed China and became the largest holder of U.S. debit. The article called it good news because China has found a better way to invest its money elsewhere. It is an indication that China is trying very hard not to be trapped in U.S. treasury bonds. The article stated that the reason for China to reduce its holding of shares of U.S. Treasury Bonds is that China has shifted its investments into other assets that have a better return. Meanwhile China plans to make investments in other areas, including the Asian Infrastructure Investment Bank, the Silk Road fund, and BRICS (an association of five major emerging national economies: Brazil, Russia, India, China and South Africa). In addition, China also needs to protect the stability of its own currency. The article predicted that holding U.S. debit will remain as the largest share of China’s foreign reserve. It could also go up if needed but the overall trend will decrease.
Source: China Review News Agency, April 26, 2015