China became the No 1 holder of American debt
Compare with $587 billion at the end of September, China got the largest monthly increase this year in October of the holdings of US treasury securities by $65.9 billion, which make it replace Japan to become the top holder of US debt with a total holdings of $652.9 billion.
Fierce domestic debate has resolved around the continual increases in US debt holdings in recent months, as the country has spent $2 trillion of foreign exchange reserves in US treasury securities.
According to Wei Weixian, economist with the University of International Business and Economics, it is a fairly acceptable option because in the long term, US treasuries are still a relatively safe investment for China.
In spite of the economic crisis, the US economy is still the strongest, he added, China does not have many choices in deploying its massive amounts of foreign exchange reserves.
China Investment Corporation (CIC) once suffered severe losses in its investment in the US private equity firm Blackstone due to the tumbling international financial markets. CIC said it would be more cautious in investment abroad.
The US treasury debt is relatively a low risks and good liquidity investment, said Guo Tianyong, economist with the Central University of Finance and Economics.
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