Nation may hike US debt in short term

China could still increase its holdings of US Treasuries if the dollar is stable, even though the long-term trajectory is to diversify its foreign exchange reserves, a former central bank governor said in an essay.

The nation will need some time to diversify its foreign- exchange reserve holdings and the US government should take "substantial" measures to honor its promise of ensuring the safety of foreign investments, Dai Xianglong, former head of the People's Bank of China (PBOC) and currently chairman of China's National Social Security Fund (NSSF), wrote in an article in the Chinese-language publication. China Finance.

China's yuan will "surely become a significant currency for international reserves after years of efforts". The gradual process will include letting foreign governments and businesses obtain the currency through loans, yuan-denominated bond sales in China, trade payments and currency-swap agreements, according to Dai's article.