Friday, February 12, 2010

China orders retreat from risky assets

By Ambrose Evans-Pritchard
From Telegraph UK:

China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets.
BNP Paribas said the move has major implications for global risk assets. "The message from Beijing is that we don't like this environment," said Hans Redeker, the bank's currency chief.
The directive covers both the State Administration of Foreign Exchange (SAFE) and China's state-controlled commercial banks. Together they have an estimated $3 trillion (£1.9 trillion) of foreign holdings.
The exact break-down of China's holdings are a state secret but it is understood that SAFE bought large amounts of corporate debt as well as municipal and state bonds during the boom years of 2006 and 2007. Any move to liquidate holding of California debt at this crucial juncture could have serious implications. Read the rest.


Blogger Jefferson's Guardian said...

It's official...

The Chinese move hit markets because it is now the economy that everyone is looking at to gauge the strength of the recovery. The US is no longer the lead economy.

History may mark this date as the official beginning of the decline of the American Empire.

12:30 AM  

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