China, Japan to begin selling US Treasurys?
News On Japan via ibtimes.com -- Mar 22
China will soon need to begin selling U.S. Treasury issues in order to fund its trade deficit, according to financial blogger Frederick Sheehan.
Over the past decade China has run persistently large trade surpluses with the world, particularly the United States. Much of the cash generated by these imbalances was lent back to the U.S. government through purchases of Treasurys, which have been a safe, liquid investment for the Chinese.
From January 2001 to January 2012, China increased its Treasury investments by over $1 trillion en route to becoming the largest foreign holder of the securities.
But the trade surpluses and Treasury-buying by China have peaked and are headed for reversal, wrote Sheehan, former head of asset allocation at John Hancock Financial Services in Boston.
In February, China posted a trade deficit of $31.5 billion, the country's biggest in more than a decade.
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