The news has attracted a lot of attention from global investors as data released by the U.S. Treasury Department showed that the number of U.S. Treasuries held by foreign countries hit another record high in December 2023. Among these countries that hold US bonds, not only Japan, China, and the United Kingdom, the top three overseas creditors of US bonds, have increased their holdings of US Treasury bonds, but even other countries have shown signs of "crazy grabbing" of US bonds. In particular, China increased its holdings of U.S. Treasuries by $34.3 billion in December, further cementing its position in the U.S. bond market. The move has sparked widespread speculation about what exactly is China's motive behind it.
With the third meeting of the U.S.-China Economic Working Group held in early 2023, China's Vice Minister of Finance Liao Min and U.S. Deputy Secretary of the Treasury Shang Bo had an in-depth exchange. The meeting was seen as a symbol of a further strengthening of relations between China and the United States, and provided a backdrop for China to increase its holdings of U.S. Treasury bonds again. As Yellen plans to visit China again, China, one of the largest creditors of the United States, continues to increase its holdings of U.S. debt.
Behind China's resurgence of increasing its holdings of U.S. Treasury bonds, it is not only based on investment strategy considerations, but also for deeper reasons that we need to dig deeper. First of all, from a technical point of view, China's overweight behavior is not blindly following the herd, but based on a good judgment of market trends. A series of positive news in November last year sent US Treasuries** higher, and China, as an investor, certainly hopes to take advantage of market opportunities to make bigger profits. This is also one of the considerations for China to increase its holdings of US bonds in November last year.
Second, the optimization of China's overseas asset structure has also contributed to its increase in US Treasury bonds. It is reported that China has huge overseas assets, including physical assets and financial assets, of which US Treasury bonds are one of its important financial assets. In order to ensure the safety and steady appreciation of assets, China needs to maintain the stability and appreciation of its asset structure through flexible investment strategies. Therefore, increasing the holdings of U.S. bonds is also part of China's overseas asset allocation and is of strategic significance.
Yellen's plan to visit China again provides an important opportunity for the development of economic relations between China and the United States. China has a positive attitude towards Yellen's visit to China, and spokesperson Mao Ning made it clear that China is willing to maintain the principles of mutual respect, peaceful coexistence and win-win cooperation with the United States, and promote the healthy and stable development of bilateral economic and trade relations. On the occasion of Yellen's upcoming visit to China again, China's choice to increase its holdings of U.S. Treasury bonds has undoubtedly injected new impetus into the development of Sino-US economic relations.
In addition, the smooth holding of the third meeting of the Sino-US Economic Working Group has also provided a strong guarantee for the stable development of Sino-US relations. During the meeting, the two sides had in-depth exchanges on the macroeconomic situation and policies, demonstrating the sincerity of China-US cooperation in the economic field. This shows that China and the United States are resolving their differences through dialogue and consultation, and jointly promoting the development of economic relations in a healthier and more stable direction.
China's move to increase its holdings of U.S. Treasury bonds again not only reflects China's keen grasp of the market and flexibility in asset allocation, but also demonstrates China's responsibility and responsibility as a major global economy. China's measures are not only conducive to ensuring the safety and appreciation of its overseas assets, but also make a positive contribution to the stability and prosperity of global financial markets. As the economic relations between China and the United States continue to deepen, China will continue to uphold the principle of openness and cooperation and promote the steady development of China-US bilateral economic and trade relations.
Overall, China's move to increase its holdings of U.S. Treasuries again is based on rational investment considerations in the market and is a positive boost to bilateral economic relations. Against the backdrop of increasing uncertainty in the current global economic situation, China's measures will help maintain the stability of the global financial market and promote the common prosperity of the economies of all countries. As an important player in the global economic landscape, China will continue to play a constructive role and work with other countries to promote the sustainable development of the world economy.