Future purchases of United States Treasuries by China will depend on its need to protect the value of its foreign investments, Premier Wen Jiabao said on January 31.
China is the single biggest foreign investor in US Treasuries, with US$681.9 billion as of November, according to US data.
"This is a very sensitive question and a question that President Barack Obama will want to ask," Wen said in London in response to a query over Chinese demand for US government bonds.
"In recent years, our foreign reserves have been growing very fast. We are trying to bring more diversification to the holdings of the foreign exchange reserves. Buying US Treasury bonds is a major part of it," Wen said.
"Whether we will buy more US Treasury bonds, and if so by how much, we should take that decision in accordance with China's own need and also our aim to keep the security of our foreign reserves and the value of them," he said.
Wen also stressed the importance of a stable yuan. "In the financial crisis, it is all the more important to maintain the stability of the yuan exchange rate in a reasonable and balanced level, this is not only in the interests of China but also in the interest of the world economy."
Wen is in London for talks with British Prime Minister Gordon Brown ahead of a G20 London financial crisis summit in April.
(Shanghai Daily February 2, 2009)
