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China Backs Obama With U.S. Treasury Securities Rising 3% To $900 Billion

Sunday, June 20, 2010 - 4:18 PM
(This article covers many areas briefly.  Thought some here would be interested.  I didn't choose the title, etc.)

http://www.bloomberg.com/news/2010-06-20/china-backs-obama-with-u-s-treasury-securities-rising-3-to-900-billion.html

Some excerpts:

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A year after criticizing U.S. fiscal policy as “irresponsible,” China’s leaders are showing increasing confidence in President Barack Obama’s leadership of the American economy.

China boosted holdings of Treasury notes and bonds by 2.6 percent to $900.2 billion in March and April, after reducing its stake by 6.5 percent from November through February, the longest consecutive monthly declines in a decade, U.S. data released June 15 showed. The People’s Bank of China said June 19 that it will relax its 23-month lock on the yuan.

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By purchasing longer-term securities, China is helping keep U.S. borrowing costs near record lows, aiding companies and individuals as the U.S. economic recovery strengthens.

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Long-term U.S. rates would be about a percentage point higher without foreign government and central bank buyers, according to studies done in 2006 and 2009 by Professors Francis and Veronica Warnock at the University of Virginia in Charlottesville, who researched the matter for the Federal Reserve.

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“If we don’t boost our national savings rate, with trillion dollar deficits as far as the eye can see, the Chinese piece of our multilateral trade deficit just goes somewhere else,” Roach said. “It goes to a higher-cost producer and that taxes the American people.”

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“We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets,” Chinese Premier Wen Jiabao said in March 2009 after Obama signed last year’s $862 billion stimulus package into law. “To speak truthfully, I do indeed have some worries.”
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