17:41 GMT +330 March 2017
    People look at the exchange rate at a moneychanger displaying a poster of U.S. dollar bill, Chinese Yuan and Malaysia Ringgit in Singapore

    China Sells Major Part of US Gov’t Bonds to Back Up Yuan

    © REUTERS/ Edgar Su
    Asia & Pacific
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    In just the last two weeks China has cut its holdings of US government bonds worth around $100 billion. Beijing justified the step as a measure to support the yuan. However, the move can also be viewed as a clear warning to the United States, DWN wrote.

    China has massively reduced its holdings of US Treasuries in the last two weeks. Beijing informed the US government about the sales, but has not indicated the exact scope of the disposals, DWN reported.

    The Chinese central bank sold the US government bonds, both directly, and indirectly Bloomberg reported, referring to insider information. Within the last twelve months, the bank also reduced their foreign exchange holdings by 315 billion dollars.

    This step is reportedly designed to help China to stabilize its financial market.

    On August 11, China started to devalue the national currency and sell US Treasuries to support the devaluation.

    “The central bank will frequently intervene in the foreign-exchange market in the next three months as it needs to ensure the currency is stable,” a representative of Citigroup Inc. in Hong Kong said, as cited by Bloomberg.

    At the same time, China's currency policy is increasingly becoming a problem for the US. The massive sales of the US government bonds could significantly reduce the gain on the disposal of investments in the United States.

    “Bear in mind here that thanks to the threat of a looming Fed rate hike and a litany of other factors including plunging commodity prices and idiosyncratic political risks, EM currencies are in free fall which means that it's not just China that's in the process of liquidating USD assets,” Zero Hedge wrote.


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    • avatar
      Hybrid war heating up.
    • avatar
    • avatar
      What emerging market currencies does Zero Hedge see in a "free fall"? And do Russia, India and China even meet that definition anymore? I think that definition is incorrectly used to mean any market other than a Western market that is controlled by the US of AIPAC.
    • Baybars
      China is throwing ballast overboard to regulate their economy. When China was doing very well they bought the dogs breakfast US T-bills to counter their currency rise and prevent inflation. Now that things are levelling out for them they can dump the bad investments.
    • Very good move from China, changes are good especially these kinds.
      Every new beginning needs an end and the end of the u.s criminals is way overdue.
    • avatar
      The Achilles Heel of the US dollar is Gold (and Silver). China should sell US$500 billion of US Treasury bonds and buy a lot of gold. That will cause gold to rise in price and the US dollar to crash.
    • avatar
      When the Nationalist government under General Chiang Kai-shek lost the Chinese civil war and thus the government of China, the American government seized Chinese government assets in terms of gold holdings and foreign currencies and whatever other assets registered in the name of the Nationalist government of China - essentially the Chinese people. It's value then was hundreds of billions. Today it would be trillions. And that's not including many U.S. bonds issued to private Chinese citizens which became overnight, junk, valueless bonds.

      The Chinese needed money to recover from the devastating 8 year war with Imperial Japanese and guess who was the dog in the manger with regards to Chinese's properties and assets?

      And they - the American government - claim that as the government of the U.S. controlling the legislation enacting Congress, they are above the law and that the new (Communist) government cannot do anything about it. Talk about the rich first world called America robbing the poor third world called China! That, in a nutshell, dear readers, is America. A nasty piece of Shylock.

      Which leads ultimately to the logical conclusion - Might is Right. Perhaps the next time Washington tries such a scam again, Beijing should make a targeted bombing of the Black House, those fools on the Hill, and the Federal Reserve Bank. Not to mention an "accidental" bombing of JP Morgan Bank headquarters. But of course, they will seize U.S. assets in China first.
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