Chinese fund may cut holdings of US Treasurys: report

The Shanghai Securities News quoted Lou Jiwei, chairman of sovereign wealth fund manager China Investment Corp. (CIC), as telling a conference in Hong Kong on Monday that the U.S. economic recovery had made other investments appealing.

China has the world's largest foreign exchange reserves and according to U.S. government figures is the largest foreign holder of U.S. Treasuries with US$1.16 trillion at the end of October last year, the latest available statistic.

“In line with the future U.S. economic recovery, the appeal of U.S. debt is weakening,” Lou said. “From a long-term perspective, it is not a good investment target.”

However, he added that completely stopping buying of U.S. Treasuries could hurt the fund's ability to manage risk.

“For this reason, CIC's method is to buy relatively less U.S. debt with hopes of allocating more to stocks and other assets,” Lou said, without specifying whether he was specifically referring to U.S. dollar assets.

Last year, the fund was overweight in investments in the United States and developing countries but underweight in Europe given the continent's sovereign debt crisis, the report said.

CIC saw the manufacturing and property sectors as attractive for future investments, it said.

CIC could not be reached for comment on the report on Tuesday.

It was established in 2007 to invest some of China's massive foreign exchange reserves, which stood at US$3.31 trillion at the end of last year.

China's sovereign wealth fund suffered a 4.3-percent loss on its overseas investments in 2011 due to the weak global economy. It was the first loss since 2008, when CIC was hit by the global financial crisis.

China on Monday announced it had set up a new office under the foreign exchange regulator to funnel some of the reserves to domestic companies, in the form of commercial loans to support their overseas expansion.

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January 17, 2013    bwmmiller@

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American people are facing a downward spiral economically. China will find the "Feds", international corporatist banksters, gangsters, plutocratic controllers of all things U.S. have reduced the U.S. Dollar's PPP to pennies, reflected in the rising prices of Gold, Oil and other commodities world wide. Any cut in U.S. paper will make very poor gains now, even worse gains the longer time passes. Cutting loans to U.S. and increasing the amount U.S. investors can put into Chinese companies, on a joint basis a good simultaneous plan. Understanding the "Feds" as the hidden fist in every American business deal is important. Dealing with Canada more likely to reap win-win fair deals. Canada seeks manufacturing opportunities, offers Oil, Grain, Thorium, Uranium, even Coal and CNG. and needs cheaper cars, more light manufacturing jobs, offers huge number of graduate students from Canadian schools with high world wide ratings, ready to learn Mandarin and teach U.K., Canadian, Australian, American, English. Canada also has a Hemp industry, University of Alberta has a hemp technology for car bodies.

January 17, 2013    peteryong@

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Yes, China should invest more in South America, Africa, New Zealand, Canada, and South East Asia.

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