CRI听力: China's Lower Holding of US Treasury Bonds in No Way Means the Nation Lacks Confidence in th

Anchor: For the first time in more than a year, China has reduced its holding of US Treasury bonds. Experts say the move reflects the nation's desire to maximize profits but in no way means China lacks confidence in the securities.

Our reporter Wang Ling has more. (www.hXen.com)

Data from the US Treasury showed China had shorn its stake in Treasury bonds by 4.4 billion US dollars as of the end of April compared with March. China remains the US's largest creditor with Treasury securities holdings worth 763.5 billion US dollars.

Finance expert from Chinese Academy of Social Sciences, Liu Yuhui explains:

"The reduced holdings are a rather small amount compared with the holdings of more than 700 billion US dollars. It is too early to tell whether the reduction will continue since doing so would cause great loss to China's dollar-linked assets. It will also trigger the US bond rate to increase and put pressure on the American economy."

Although the weakening US dollar has posed a threat to the holdings of US Treasury bonds, China hasn't yet made the decision to sell its holdings.

Liu Yuhui says the country's latest trading in short-term bond holdings is a reasonable move in investment.

"Concerned with the inflation risk under the US's quantitative monetary policy, China at this moment started to sell medium and long-term Treasury bonds and to trade short-term bonds. Technically, it was reasonable because the market of the Treasury bonds fell sharply in the US; and the situation demands China to restructure its foreign exchange reserve."

China is not the only nation that trimmed its holdings of US Treasury bonds. Russia and Brazil are also considering reducing their reliance on the US dollar. Liu Yuhui says the major emerging economies have made attempts for bigger roles in the global financial institution, yet, it still takes time to form a new international currency system.

"The US dollar and dollar-linked assets are still the major foreign exchange reserve in the global finance. What China should do at the moment is to move further to make renminbi an international currency. We have formed a regional basis in East Asia and Pan-Pacific areas with China being the center of the regional production and transportation. It means China has been playing an important role for many countries economic growth, upon which the Chinese renminbi will continue its development as an international currency."

Wang Ling CRI news.