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U.S. Downplays Hints Of China Dollar Sales

Treasury Secretary John Snow said Jan. 10 the U.S. economy would weather any move by China to sell part of its massive dollar holdings. "People invest in the U.S. because our risk-adjusted returns are better," Snow said.

Confidence in the country's legal system and markets remains high, he added.

"As long as we can sustain this sort of environment, and I believe we will, the U.S. will be able to attract the capital it needs, for both the public and private sector," Snow said.

On Jan. 5, State Administration of Foreign Exchange chief Hu Xiaolian said China would "perfect the management of our foreign exchange reserves and actively explore new ways to use our reserve assets even better".

China's currency reserves, the second-largest in the world after Japan's, rose to $794.2 billion at the end of November, according to previous reports in the state media. Some economists estimate they will soon be even bigger than Japan's, topping one trillion dollars by the end of this year, and so China may be wanting to signal its growing clout, according to analysts.

Copyright Agence France-Presse, 2006

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