The MasterBlog: China Less Willing to Be America’s Piggy Bank - New York Times
Subscribe to The MasterBlog in a Reader Subscribe to The MasterBlog by Email

MasterBlogs Headlines

Monday, December 24, 2007

China Less Willing to Be America’s Piggy Bank - New York Times

China Less Willing to Be America's Piggy Bank - New York Times

The New York Times


December 22, 2007
Off the Charts

China Less Willing to Be America's Piggy Bank

For the last three years, China has been the financier that kept the American government well funded. In 2004, it bought a fifth of the Treasury securities issued, a proportion that rose to 30 percent in 2005 and to 36 percent in 2006.

But according to United States government figures, China reversed course in 2007 and has become a net seller of Treasury securities. The Treasury said this week that China had $388 billion in Treasuries at the end of October, slightly less than it had at the end of 2006.

The sales, if the American estimates are correct, have come in a year when the dollar has been weak against most currencies. The sales would be consistent with China's diversifying its investments into other currencies.

But the figures may be misleading.

For one thing, other Treasury estimates show that the Chinese are still increasing their holdings of bonds issued by quasi-government agencies, like Freddie Mac and Fannie Mae, and by American companies.

Even including those purchases, however, the rate of increase of Chinese holdings of dollar-based securities seems to have slowed.

The other problem is that the Treasury has a history of getting these numbers wrong, and then fixing them months later.

The initial estimates are based on reports of transactions in securities; sales involving long-term securities, like Treasury bonds and notes, reflect only the initial buyer.

So if China bought Treasuries through an intermediary in Britain or Hong Kong, the sale might be attributed to those areas.

Each June, the Treasury does a survey of actual holdings and revises its previous estimates. The survey from June 2007 will be incorporated in the February data.

A year earlier, the June 2006 figure was revised up by $62 billion, and a similar revision could come this year.

If so, that would reduce but not erase the trend toward China's owning fewer Treasuries. The country is running a huge trade surplus that brings in billions of dollars each month, and its options are limited.

It may need to buy dollar-denominated investments in significant amounts to keep the Chinese currency from rising too far against the dollar, but those investments do not have to be Treasuries.

This week China invested $5 billion in Morgan Stanley , an investment bank that needed to raise capital.

Over all, foreigners continue to finance the American government deficit, with their Treasury holdings rising $194.7 billion in the first 10 months of the year, more than the $166 billion increase in Treasury securities held by the public.

Since January 2001, when President Bush took office, the debt issued to the public has risen by $1.7 trillion, with $1.3 trillion of that increase being taken by foreigners, the Treasury estimated.

Of that, the increase for China was $327 billion, about a fourth of the foreign total.


DCSIMG

No comments:

Post a Comment

Commented on The MasterBlog

Tags, Categories

news United States Venezuela Finance Money Latin America Oil Current Affairs Middle East Commodities Capitalism Chavez International Relations Israel Gold Economics NT Democracy China Politics Credit Hedge Funds Banks Europe Metals Asia Palestinians Miscellaneous Stocks Dollar Mining ForEx Corruption obama Iran UK Terrorism Africa Demographics Government UN Living Bailout Military Russia Debt Tech Islam Switzerland Philosophy Judaica Science Housing PDVSA Revolution USA War petroleo Scams articles Fed Education France Canada Security Travel central_banks OPEC Castro Nuclear freedom Colombia EU Energy Mining Stocks Diplomacy bonds India drugs Anti-Semitism populism Arabs Brazil Environment Irak Saudi Arabia elections Art Cuba Food Goldman Sachs Syria Afghanistan Hamas Lebanon Silver Trade copper Anti-Israel Egypt Hizbollah Madoff Ponzi Warren Buffett press Aviation BP Euro FARC Gaza Honduras Japan Music SEC Smuggling humor socialism trading Che Guevara Freddie Mac Geneve IMF Spain Turkey currencies violence wikileaks Agriculture Bolívar ETF Restaurants Satire communism computers derivatives Al-Qaida Bubble FT Greece NY PIIGS Republicans Sarkozy Space Sports BRIC CITGO DRC Flotilla Germany Globovision Google Health Inflation Law Libya Mexico Muslim Brotherhood Nazis Pensions Peru Uranium cnbc crime cyberattack fannieMae pakistan stratfor Apollo 11 Autos BBC Bernanke CIA Chile Climate change Congo Democrats EIA Haiti Holocaust IFTTT ISIS Jordan Labor M+A New York OAS Philanthropy Shell South Africa Tufts Ukraine bitly carbon earthquake facebook racism twitter Atom BHP Beijing Business CERN CVG CapitalMarkets Congress Curaçao ECB EPA ETA Ecuador Entebbe Florida Gulf oil spill Harvard Hezbollah Human Rights ICC Kenya L'Oréal Large Hadron Collider MasterBlog Morocco Nobel Panama Paulson RIO SWF Shiites Stats Sunnis Sweden TARP Tunisia UN Watch Uganda VC Water Yen apple berksire hathaway blogs bush elderly hft iPad journalism mavi marmara nationalization psycology sex spy taxes yuan ALCASA ANC Airbus Amazon Ariel Sharon Australia Batista Bettencourt Big Bang Big Mac Bill Gates Bin Laden Blackstone Blogger Boeing COMEX Capriles Charlie Hebdo Clinton Cocoa DSK Desalination Durban EADS Ecopetrol Elkann Entrepreneur FIAT FTSE Fannie Freddie Funds GE Hayek Helicopters Higgs Boson Hitler Huntsman Ice Cream Intel Izarra KKR Keynes Khodorskovsky Krugman LBO LSE Lex Mac Malawi Maps MasterCharts MasterFeeds MasterLiving MasterMetals MasterTech Microsoft Miliband Monarchy Moon Mossad Mugabe NYSE Namibia Nestle OWS OccupyWallStreet Oman PPP Pemex Perry Philippines Post Office Private Equity Property Putin QE Rio de Janeiro Rwanda Sephardim Shimon Peres Stuxnet TMX Tennis UAV UNHRC VALE Volcker WTC WWII Wimbledon World Bank World Cup ZIRP Zapatero airlines babies citibank culture ethics foreclosures happiness history iPhone infrastructure internet jobs kissinger lahde laptops lawyers leadership lithium markets miami microfinance pharmaceuticals real estate religion startup stock exchanges strippers subprime taliban temasek ubs universities weddimg zerohedge

Subscribe via email

Enter your email address:

Delivered by FeedBurner

AddThis

MasterStats