Sunday, July 26, 2009

China's forex reserves cross $2 trillion

Brad Setser points attention to the fact that Chinese foreign exchange reserves crossed $2 trillion, doubling in less than three years, in April. The Chinese holdings of US Treasuries is expected to top $1 trillion later this year.

And despite all talk of diversifying away from dollar-based assets, the Chinese holdings of safe US assets (treasuries, agency debt, short term bank claims) have been growing in line with its reserves, though holdings of riskier US assets (corporate bonds and equities) have tapered off.

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