US reform raises China's hope of its investment security

18 June 2009

US President Barack Obama's plans to restructure US financial regulations, unveiled yesterday, seems to have reassures China on the security of its investments in the US.

China is the biggest holder of US Treasury bonds and the weakening of the dollar has reduced the value of China's holdings of these bonds, which also dents investor' confidence in the dollar in general and dollar-linked assets, in particular.

China has been time and again asking for the safety of its investments in the US. In March, Premier Wen Jiabao called on the United States "to guarantee the safety of China's assets." (See: Chinese premier expresses concern over American investments).

China cut its stake in Treasury bonds in April by $4.4 billion to $763.5 billion, US compared to March, Treasury data showed as of April end

The US administration has ben trying to weather China's concern about the safety of US treasury bonds and other investments saying US was the safest place in the world for investments. (See: US tries to calm China's fears over bonds, investments)

Chinese commentators believe that the proposed revamp of the financial sector regulations would help protect Chinese investments, a major after the global financial crisis that originated from the breakdown of the US financial sector.