China’s $3.2 Trillion Headache
While the downgrade of US government debt by Standard & Poor’s shocked global financial markets, China has more reason to worry than most: the bulk of its $3.2 trillion in official foreign reserves – more than 60% – is denominated in dollars. What's worse, from China's perspective, is that there is no short-run method to diversify these holdings.
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BEIJING – While the downgrade of United States government debt by Standard & Poor’s shocked global financial markets, China has more reason to worry than most: the bulk of its $3.2 trillion in official foreign reserves – more than 60% – is denominated in dollars, including $1.1 trillion in US Treasury bonds.