Premier 'worried' about safety of China assets in US

(China Daily)
Updated: 2009-03-14 08:31

Premier Wen Jiabao said on Friday he was "a little worried" about the safety of Chinese assets in the United States, and urged the US government to ensure the security of those assets.

Wen noted that Beijing was the US' biggest foreign creditor and asked Washington to ensure that its response to the global slowdown did not damage the value of Chinese holdings.

"We've lent a huge amount of capital to the United States, and of course we're concerned about the security of our assets. And to speak truthfully, I am a little bit worried," said Wen at a press conference after the close of the annual parliament session.

"I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

China has invested its huge foreign exchange reserves in low-risk but low-yield assets such as US government bonds.

"China is indeed the largest creditor of the United States, which is the world's biggest economy. We are extremely interested in developments in the US economy," Wen said.

He said he hoped the measures taken by the Barack Obama administration to counter the global financial crisis would be effective.

Wen reiterated China's principle of guaranteeing the "safety, liquidity and good value" of its foreign exchange reserves and diversifying its investment.

"On the foreign reserves issue, the first consideration is our national interest," said Wen. "But we also have to consider the stability of the overall international financial system, as the two factors are interlinked."

"Currently, our reserves are generally safe," he said.

China's foreign exchange reserves touched a record $1.95 trillion at the end of 2008, the largest in the world, and far exceeding that of Japan, the second-largest holder with $1.03 trillion.

Analysts estimate that nearly half of the reserves are invested in US Treasuries and notes issued by other government-affiliated agencies.

According to the US Treasury, China held $681.9 billion worth of US government bonds as of November 2008.

Washington is counting on China to continue buying treasuries to fund its $787- billion stimulus package. Last month, visiting US Secretary of State Hillary Rodham Clinton sought to reassure China that government debt would remain a reliable investment.

Asked whether China would let its currency depreciate to try to spur its exports, Wen said this did not accord with the facts: because European and Asian currencies had fallen hard in the past year, while the yuan had been actually gaining in value, putting pressure on China's exports.

Wen restated China's long-standing determination to keep the yuan basically steady, and said Beijing alone would set the course of the currency. "No other country can put pressure on our country to depreciate or appreciate the renminbi."

China Daily, Xinhua and agencies