Data purporting to show that China has been dumping its holdings of Treasury bonds have caught the attention of market bears and the financial press. But one economist believes these claims have been greatly exaggerated. And he’s got the numbers to back this up.
In a blog post published this week that caught the attention of some on Wall Street, Brad Setser, an economist and senior fellow at the Council for Foreign Relations, showed that a popular U.S. government data series on holdings of U.S. assets by foreign buyers doesn’t tell the whole story. Setser found that the only notable shift in the composition of China’s foreign securities haul over the past eight years — at least as far as the U.S. is concerned — has been that Beijing’s reserve managers have favored agency debt like mortgage bonds over Treasurys. Although China has slightly pared back its Treasury holdings over the past two years, its total exposure to U.S. assets appears to have changed little going back to 2015, contrary to claims that China has been actively “de-dollarizing” as geopolitical tensions with the U.S. have flared. “China has not been dumping its Treasury holdings, but people highlighting the TIC data to argue that China is dumping …
Article Attribution | Read More at Article Source