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USA Grows More Dependant On China
BayBak, Azerbaijan | 1425 days ago | Sunday, 26th July , 2009 , 03:29 [am] | International
|.||China urges the USA to make the dollar stable as China is the largest creditor of the United States. Chinaâ€™s US Treasury bond holdings were evaluated at US$801 billion in May of this year. Besides, the strong dollar makes Chinese exports more competitive. However, the two countries depend on each other and both realize it.|
China urges the USA to make the dollar stable as China is the largest creditor of the United States. Chinaâ€™s US Treasury bond holdings were evaluated at US$801 billion in May of this year. Besides, the strong dollar makes Chinese exports more competitive. However, the two countries depend on each other and both realize it.
China needs the stable dollar. Chinaâ€™s Assistant Finance Minister Zhu Guangyao said that China would propose the USA to take measures to â€œmaintain the basically stable dollar exchange rate and protect the safety of China’s investments in the U.S,â€ Interfax reports.
Beijing is going to put forward these requirements to American authorities in the context of the United States-China Strategic and Economic Dialogue â€“ the conference which is slated to take place on July 27-28 in Washington.
China â€™s keen interest in the dollar can be explained. The nation is the worldâ€™s biggest holder of U.S. government bonds. For May 2009, Beijing holds $801.5 billion of US Treasuries.
China â€™s investment in the US government debt has surged twofold to $763.5 billion within three years (till May 2009).
By the end of April 2009 the investment in the US Treasuries accounted for 38 percent of Chinaâ€™s gold and foreign exchange reserves.
The PRC gold and foreign exchange reserves has risen to a record sum of $2.13 trillion. Moreover, the forex reserves make the largest share of gold and foreign exchange reserves.
The share of gold in the Chinese reserves makes â€œbarelyâ€ 1.054 tons (while the USA has 8.300 tons). By the Chinese government opinion one can speak of secure economy only after this ratio achieves 5.000 tones.
At the same time, China is dependant on the USA in terms of credit activities, as only the US Treasuries market can accept the huge volume of money that China possesses.
The Chinese assets have lost their value during the economic crisis, which raised serious concerns with the Chinese authorities.
According to expertsâ€™ estimates, China is interested in the stable dollar for two reasons: because of the national reserves and from the point of view of the exports.
China is the biggest goods exporter to the US market. The strong dollar makes the exported Chinese goods cheaper and thus more competitive. Thatâ€™s why the nationâ€™s government artificially keeps the yuan weaker against the dollar.
The United States on its part wants China to establish the free exchange rate for the yuan as soon as possible. As for dollar rate the USA is interested in both strengthening and weakening the dollar.pravda, Voice of a Nation