China
has 'canceled US credit card': lawmaker By Apr 30, 2009
WASHINGTON
(AFP) — China, wary of the troubled US economy, has already
"canceled America's credit card" by cutting down
purchases of debt, a US congressman said Thursday.
China has the world's largest foreign reserves, believed
to be mostly in dollars, along with around 800 billion dollars
in US Treasury bonds, more than any other country.
But Treasury Department data shows that investors in China
have sharply curtailed their purchases of bonds in January
and February.
Representative Mark Kirk, a member of the House Appropriations
Committee and co-chair of a group of lawmakers promoting relations
with Beijing, said China had "very legitimate" concerns
about its investments.
"It would appear, quietly and with deference and politeness,
that China has canceled America's credit card," Kirk
told the Committee of 100, a Chinese-American group.
"I'm not sure too many people on Capitol Hill realize
that this is now happening," he said.
The Republican lawmaker said that China was justified in
concerns about returns from finance giants Fannie Mae and
Freddie Mac, which were bailed out by the US government due
to the financial crisis.
Kirk said he was the first member of Congress to tour the
Bureau of Public Debt, which trades bonds, and was alarmed
at how much debt was being bought by the US Federal Reserve
due to absence of foreign investors.
"There will come a time where the lack of Chinese participation
may have a significant impact," Kirk said.
"We should track that, because up until last month they
were the number one provider of currency to the United States
and now they're gone."
With China's economy also hit by the global economic crisis,
Premier Wen Jiabao has openly voiced concern about the status
of his country's investments in the United States.
China has also floated replacing the dollar as the key international
currency with a basket of units bringing in the euro, sterling
and yen.