Photo: Flickr/Marjan Krebelj
In general, it’s our stance that Chinese ownership of US Treasuries is overblown as an issue to be interested/concerned about.People make a big deal of undulations in the level of UST holdings by Beijing, and some people are mistakenly under the belief that they have us over a cliff, and could destroy our economy if they wanted to.
That’s not really the case. Chinese ownership of US debt is mostly about China recycling its trade surplus.
If China wanted to buy something else with the dollars it gets from US trading partners, then it would just be someone else buying UST.
The documents viewed by Reuters show the U.S. Treasury Department has given the People’s Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011.
China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.
Given China’s volume, this is probably mostly about convenience, and unfortunately the revelation will probably just rile people up/concern people even more about at an issue that’s no big deal.