Thursday, July 8, 2010

PRC Addresses Fears About Using Debt Holdings As Weapon

A statement by the PRC's State Administration of Foreign Exchange said decisions were made on the basis of wealth maximization, and fears of the PRC using its holdings of U.S. Treasuries as a "debt weapon" are groundless.
According to The China Daily, the SAFE described Beijing as a responsible long-term investor and "doesn't seek the power to control recipients of its investment."

The statement was issued to allay concerns about Beijing planning to shift its holdings of US government debt.

"Any increase or decrease in our holdings of US Treasuries is a normal investment operation. The agency constantly adjusts its portfolio to maximize returns, and any changes to its US Treasury portfolio should be seen in that light and not interpreted politically," it said in the statement.

This one takes a dedicated sinologist to interpret properly. We in the West are used to treating such official insurances skeptically; there's even a relevant political maxim, "don't believe anything until it's been officially denied." From what I've read, ordinary mainland Chinese tend to regard American with admiration or even awe. The PRC ruling class is separate from them, but I think the separateness consists of a more businesslike view. If the proverbial gun was put to my head, I'd say the above statement should be taken at face value. The post-Deng PRC administration has done awful things, but they haven't abused the world's trust (as yet.)

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