Data released over the weekend by China’s central bank showed the Chinese government sold bonds heavily in January and February before resuming purchases in March.
From The NYT: China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.
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Chinese reserves fell a record $32.6 billion in January and $1.4 billion more in February before rising $41.7 billion in March… A resumption of growth in China’s reserves in March suggests, however, that confidence in that country may be reviving, and capital flight could be slowing.
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Economists said there was no sign that the Chinese government had deliberately throttled back its purchases of overseas bonds to punish the United States for pursuing monetary and fiscal policies aimed at stimulating the American economy.While those policies may run a long-term risk of setting off inflation, they also may benefit China if they rekindle economic growth in the United States and thereby revive China’s faltering exports.
The main effect of slower bond purchases may be a weakening of Beijing’s influence in Washington as the Treasury becomes less reliant on purchases by the Chinese central bank, the paper said.
