China won't dump U.S. Treasuries or pile into gold

[The Northerner]

(Reuters) - China on Wednesday ruled out the "nuclear" option of dumping its vast holdings of U.S. Treasury securities but called on Washington to be a responsible guardian of the dollar.

In the third in a series of statements explaining its work to the Chinese public, the State Administration of Foreign Exchange sought to allay concerns in the outside world that arise whenever Beijing shifts its holdings of U.S. government debt.

"Any increase or decrease in our holdings of U.S. Treasuries is a normal investment operation," SAFE, the arm of the central bank that manages China's official currency reserves, said.

It said it constantly adjusts its portfolio to maximize returns, and any changes to its U.S. Treasury portfolio should be seen in that light and not interpreted politically.

In a series of questions and answers posted on its website, www.safe.gov.cn, SAFE asked rhetorically whether China would use its $2.45 trillion stockpile of reserves, the world's largest, as a "nuclear weapon."

SAFE said such concerns were completely unwarranted.

Read more: http://www.reuters.com/article/idUSTRE6660VC20100707

[Old and In the Way]

1. "$2.45 trillion stockpile of reserves"

That seems to be a pretty good reason not to do anything rash...dumping dollars will make that $2.45TT worth a lot less.

[dipsydoodle]

2. Probably just buy BP instead

.

[dmallind]

3. AKA "China not a bunch of wacked out internet conspiracy theorists. Phew." NT

[NNN0LHI]

4. They know what would happen if Russia or Italy dumped a few hundred tons of gold on the world market...

Which a lot of countries could do at any time.

Don