China’s talk about slowing down purchases of US debt may be more than just talk. While the government there is still wildly exposed to the dollar, and a huge buyer of Treasuries, new data indicates that the country has seriously pulled back its purchases.
In fact, reports NYT, the government was a net seller during January and February, though it resumed its purchasing in March.
A number of Chinese officials have expressed concern over the dollar in recent weeks, as the US has sought to actively assure them that all payments will be made, and that there are no intentions of inflating the dollar to the moon.
In the meantime, China’s slowdown has been offset by private buyers as part of the general flight-to-safety that has pushed the Dollar to strength, even as the fundamentals have clearly deteriorated. It may be healthy to have buyers more spread out, but then at least if it’s one big country doing the buying, you can send your Secretary of State on a bond sales mission when they get cold feed. It’s kind of hard to do the same when the buying is private and more spread out.