China to Dump $2 TRILLION in Treasuries!

Shocker out of China today- no mention of a revaluation as has been rumored to occur this weekend, its something FAR WORSE.  The long anticipated Chinese dumping of US treasuries may be here.
A prominent Chinese banker today openly called for China to dump $2 Trillion of its treasury holdings.
As this news circulates, expect gold and silver to GAP higher on the Asian open tonight, and the dollar to make like Wile E. Coyote.

From Xinhua:
BEIJING, April 23 (Xinhua) — China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.
The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.
China’s foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.
Tang’s remarks echoed the stance of Zhou Xiaochuan, governor of China’s central bank, who said on Monday that China’s foreign exchange reserves “exceed our reasonable requirement” and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.
Meanwhile, Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.
Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.
However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.

Comments

  1. sierra_hpbt says:

    wow. here we go folks..

  2. Anonymous says:

    Buckle in folks and put on your oxygen masks! Dollar's about to make a crash landing!

  3. This is a news article, like obama administration comes up with too, time & again. I guess the fomc meeting on the 27th shd be taken into consideration before giving any further thought to this news. Eventually, the $ will come to levels of 70, 66, 60 and further down but only tomm & 27th will tell the real story. I expect the slv to consolidate at this level for a bit.

    But thats me and one cant dictate what the mkts do.

  4. Anonymous says:

    And people think Bernanke can stop QE? Give me a break.

  5. Anonymous says:

    My BS meter is peaking here. It would be foolish to announce such a decision in this manner. Much better to quietly sell as much as possible so as not to trigger a panic sell off. Besides, who in their right mind wants to buy US Tresuries besides the FED?

  6. Anonymous says:

    But China has already quietly been dumping all their treasuries ever since 2008- buying up every resource and mining company available in the world. If they're announcing this now, they've already gotten out of their position.

  7. Anonymous says:

    I thought China only held 1 trillion in US treasuries, something doesnt add up.

  8. Anonymous says:

    China has 3 trillion in total FX reserves if you price it all in dollars. 1 trillion of that would be in USD. So if they cut the 3 trillion by 2/3 across the board that would be $333 billion in treasuries sold. According to this site 65% of Chinas FX holdings are in U.S. dollars : http://www.shanghai.gov.cn/shanghai/node23919/node23923/userobject22ai40406.html

  9. The Debt Ceiling Crisis and China Dumping it's T-bills is the perfect economic Armageddon! The US can't buy back all these T-bills! China is waiting to pounce on the US to blow away Wall Street and the Criminal Banksters! This will end all entitlements programs for good and the unemployment in June will be at 60%! Riots will be erupting everywhere, and the US empire will be gone by July 2011. Thanks to China, The Tea-party Republicans and the Democrats!

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