Suspicion Grows Over China Dumping U.S. Assets
On Tuesday, a Federal Reserve official downplayed talk of China dumping its U.S. assets. Reuters’ Kevin Plumberg wrote yesterday:
Dallas Federal Reserve President Richard Fisher said on Tuesday China would not do anything to harm U.S. interests such as dumping Treasuries, adding that solid capital returns support the dollar’s attractiveness.
Fisher, who was headed to Beijing, soundly rejected the view that China can decouple economically from developed countries such as the United States and described the relationship between the two powerhouses as “symbiotic.”
“China cannot succeed if the U.S. does not succeed,” he said after a speech sponsored by the Asia Society, noting that while China owns a lot of U.S. Treasuries its economy is still dependent on U.S. consumer spending.
Recent comments from Chinese public officials have suggested Beijing is uncomfortable with the Fed’s rapid expansion of its balance sheet. Last month, Premier Wen Jiabao said he was worried about the country’s holdings of some 70 percent of the $2 trillion in foreign reserves and asked for a guarantee of safety for Chinese assets.
While the Fed might be unconcerned about China’s intentions, the U.S. military doesn’t appear to be so sure. FOX Business’ Rebecca Diamond reported Monday that for the first time ever, the Pentagon played a war game that focused on economic warfare. And, one of their key findings involved China selling off American dollars and Treasuries…
FOX Business Video Link
Source:
“Fed’s Fisher says China won’t harm U.S. interests”
Kevin Plumberg
Reuters, April 14, 2009
Leave a Reply