China to liquidate US Treasuries: PBOC adviser
09:01 AM Sep 17, 2011
DALIAN - A key policymaker at China's central bank has let slip that Beijing aims to run down its portfolio of United States debt as soon as safely possible.
"Once the US Treasury market stabilises, we can liquidate more of our holdings of Treasuries," said Mr Li Daokui, a member of the People's Bank of China's monetary policy committee (MPC), at the World Economic Forum in Dalian.
"The incremental parts of our foreign reserve holdings should be invested in physical assets.
"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way," he added.
China's State Administration of Foreign Exchange holds about US$2.2 trillion (S$2.73 trillion) of US debt. China's policy has been to diversify slowly by investing some of the estimated US$200 billion surpluses accumulated each quarter into other currencies and assets - chiefly AAA euro debt from Germany and France.
The Chinese are clearly vexed with Washington, viewing the US Federal Reserve's quantitative easing as a stealth default on US debt.
Mr Li, one of three outside academics on China's MPC, described the deals on Capitol Hill as "just trying to by time", saying it will not be enough to stop America's "debt dynamic" turning dangerous.
Last month, the US House of Representatives approved legislation to raise the US$14.3 trillion debt ceiling by at least US$2.1 trillion, only one day before a threatened default.
Mr Li came close to calling America a basket case, saying the economic picture is far worse than when then-US President Ronald Reagan took over in the early '80s.
OBAMA's JOB PLAN IN DOUBT
Meanwhile in Washington, President Barack Obama's plan to boost the faltering economy with a US$447 billion job creation plan is facing rejection from Republican lawmakers, creating doubt about whether it can overcome obstacles in Congress.
As Mr Obama tries to rally public support behind tax breaks and spending on schools and bridges, the reaction on Capitol Hill indicates that only a few fragments of the plan may become law - most likely tax cuts to promote consumer demand and hiring. Many Republicans dismiss Mr Obama's proposal as a variant of the 2009 stimulus law they opposed.
Mr Obama proposes paying for the measure with a cap on some deductions and exclusions for high-income taxpayers, along with tax increases for private equity firms, oil and gas companies and corporate jet owners.
Republicans, who have ideas about how to lower unemployment by limiting regulation and expanding domestic oil production, are not ceding ideological or political ground to the administration.
To add to Mr Obama's woes, some rank-and-file lawmakers in his own party have complained about the tax increases in the Bill. Even the Senate's Democratic leader is not rushing to bring Mr Obama's proposal to the floor as he focuses on other legislation such as disaster assistance.
With 14 months until he faces re-election and a 9.1 per cent unemployment rate, the President has been telling the public to press Congress to "pass this Bill".
The White House has been pressing for passage of the entire Bill. Mr Obama's political adviser, Mr David Axelrod, said the administration is "not in a negotiation to break up the package" and Republicans should not consider it an "a la carte menu".
Still, White House Press Secretary Jay Carney said Mr Obama would not veto partial measures. If Congress were to "send a portion of the American Jobs Act, the President would of course not veto it", he said.
"He would sign it and then he would return to press the Congress to get the job done." AGENCIES
Cant wait for the tipping point and the end of the us dollar
09:01 AM Sep 17, 2011
DALIAN - A key policymaker at China's central bank has let slip that Beijing aims to run down its portfolio of United States debt as soon as safely possible.
"Once the US Treasury market stabilises, we can liquidate more of our holdings of Treasuries," said Mr Li Daokui, a member of the People's Bank of China's monetary policy committee (MPC), at the World Economic Forum in Dalian.
"The incremental parts of our foreign reserve holdings should be invested in physical assets.
"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way," he added.
China's State Administration of Foreign Exchange holds about US$2.2 trillion (S$2.73 trillion) of US debt. China's policy has been to diversify slowly by investing some of the estimated US$200 billion surpluses accumulated each quarter into other currencies and assets - chiefly AAA euro debt from Germany and France.
The Chinese are clearly vexed with Washington, viewing the US Federal Reserve's quantitative easing as a stealth default on US debt.
Mr Li, one of three outside academics on China's MPC, described the deals on Capitol Hill as "just trying to by time", saying it will not be enough to stop America's "debt dynamic" turning dangerous.
Last month, the US House of Representatives approved legislation to raise the US$14.3 trillion debt ceiling by at least US$2.1 trillion, only one day before a threatened default.
Mr Li came close to calling America a basket case, saying the economic picture is far worse than when then-US President Ronald Reagan took over in the early '80s.
OBAMA's JOB PLAN IN DOUBT
Meanwhile in Washington, President Barack Obama's plan to boost the faltering economy with a US$447 billion job creation plan is facing rejection from Republican lawmakers, creating doubt about whether it can overcome obstacles in Congress.
As Mr Obama tries to rally public support behind tax breaks and spending on schools and bridges, the reaction on Capitol Hill indicates that only a few fragments of the plan may become law - most likely tax cuts to promote consumer demand and hiring. Many Republicans dismiss Mr Obama's proposal as a variant of the 2009 stimulus law they opposed.
Mr Obama proposes paying for the measure with a cap on some deductions and exclusions for high-income taxpayers, along with tax increases for private equity firms, oil and gas companies and corporate jet owners.
Republicans, who have ideas about how to lower unemployment by limiting regulation and expanding domestic oil production, are not ceding ideological or political ground to the administration.
To add to Mr Obama's woes, some rank-and-file lawmakers in his own party have complained about the tax increases in the Bill. Even the Senate's Democratic leader is not rushing to bring Mr Obama's proposal to the floor as he focuses on other legislation such as disaster assistance.
With 14 months until he faces re-election and a 9.1 per cent unemployment rate, the President has been telling the public to press Congress to "pass this Bill".
The White House has been pressing for passage of the entire Bill. Mr Obama's political adviser, Mr David Axelrod, said the administration is "not in a negotiation to break up the package" and Republicans should not consider it an "a la carte menu".
Still, White House Press Secretary Jay Carney said Mr Obama would not veto partial measures. If Congress were to "send a portion of the American Jobs Act, the President would of course not veto it", he said.
"He would sign it and then he would return to press the Congress to get the job done." AGENCIES
Cant wait for the tipping point and the end of the us dollar
