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China Reverses Course, Selling U.S. Bonds



April 14, 2009 – Comments (1)

Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank.

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1 Comments – Post Your Own

#1) On April 14, 2009 at 12:32 PM, Melaschasm (< 20) wrote:

If China decides to do a long term reduction in exposure to the US bond market, it could result in the Chinese yaun increasing in value compared to the US dollar. 

Personally I think this will only happen if China manages to return to strong growth before the US. 

From an investment strategy standpoint, if you think this is likely the begining of a long trend, then it might be wise to buy some of the higher quality stocks in China.  High quality stocks in China give you upside potential in three ways, yaun appreciation, China GDP growth, and high quality companies anywhere outperform low quality companies.

Personally I am not convinced that China will return to strong growth before the USA, but it is an intrigueing possibility.

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