China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC's Chris Hogg. Inflation fear In recent months the US government's budget deficit has widened thanks in part to the Obama administration's costly stimulus plan. Our correspondent in Shanghai says that China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar. This would then erode the value of the debt China holds in the US currency. In June, China cut its holdings of US securities by about $25bn, a fall of 3.1%. 'Dollar alternative' The sales were made as the US treasury secretary was visiting Beijing to try to reassure the Chinese that their investment in his country's government debt is safe. In 2008, the Chinese increased their holdings in US debt by 52% over 12 months. "China has said it would like to establish an alternative to the US dollar as
You are free to comment on this discussion in any way you feel is appropriate. If you choose to use to use any language which our editors feel is vulgar -- by their standards -- your comment may be tagged "Crude or Lewd" and may be filtered out of the discussion by those who prefer not to read that sort of thing. If you know you have entered something which will cause your comment to be tagged, we ask that you tag it yourself to save us the time. We do encourage everyone to be civil and not make rude attacks on other people in the Forum. We don't censor out those remarks, but few people enjoy reading them and we would like participation in our Forums to be a pleasant experience for everyone. And, by concentrating on what is said instead of who is saying it, even those who may disagree with you will be more likely to consider your opinions valid.
Thank you for your cooperation!