Foreign Holdings of Treasuries Declining, ‘Low Return’
Jan. 22, 2017 (EIRNS)—Monthly figures from the U.S. Treasury show that foreign government financial institutions have increasingly reduced their holdings of U.S. government debt since the start of 2015, and this has been more pronounced since then. The largest holders and largest net sellers throughout that period have been China and Japan.
In the year ending in November 2016, for example, all foreign central banks combined reduced their holdings of U.S. Treasury securities by $405 billion; but the People’s Bank of China and the Bank of Japan between them sold $89 billion, net, in the month of November alone. Chinese and Japanese government institutions still hold more than $1.1 trillion each.
See in this context, the statement by the head of China’s sovereign wealth fund China Investment Corporation (CIC) last week, that he wants to convert CIC’s Treasury holdings, whose "returns are too low," to investments in an infrastructure buildup in the United States. And similarly, the earlier op-ed in Global Times which proposed that China both help to fund, and help to build a modern new economic infrastructure in North America.
The situation demands the creation of a Hamiltonian national credit institution in the United States to link to the Asian Infrastructure Investment Bank (AIIB) and many other new development banks of the BRICS-allied nations which are investing in great projects.