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China’s US Treasury holdings edge up as long-term sell-off continues
The slight uptick in August and September comes as concerns mount over US debt and the White House tests the Federal Reserve’s independence
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China slightly increased its US Treasury holdings in August and September – though the uptick did little to offset an overall downward trend – as persistent worries over US debt sustainability and the Federal Reserve’s independence deepened doubts about the safety of assets backed by the US dollar.
The country’s stockpile rose to US$701 billion in August, up from July’s multi-year low of US$696.9 billion, but it again trimmed the total to US$700.5 billion in September, according to data from the US Treasury Department released on Tuesday.
Foreign holdings data for August and September was released after the record-breaking 43-day shutdown of the US federal government ended last week.
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Beijing’s September holdings represent a steep 47 per cent plunge from the peak of US$1.32 trillion recorded in November 2013, according to Chinese financial data provider Wind.
China, which fell to third place among foreign Treasury holders in March – behind Japan and the United Kingdom – has largely maintained a steady retreat from US government debt, a shift that began during US President Donald Trump’s first term.
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In August, Trump nominated his top economic adviser, Stephen Miran, to a vacant seat on the Fed’s board of governors – a move that deepened concerns about the central bank’s independence, as the president seeks greater influence over monetary policy to push down borrowing costs.
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