They state:
If investors start demanding higher returns for holding riskier US debt, the rise in bond yields could erode the value of Treasuries held in currency reserves and push borrowing costs up, putting the global economic recovery in jeopardy.
"We hope the US government will take responsible policies and measures to safeguard China's foreign exchange reserves, the world's biggest, rose by nearly $200 billion in the first quarter to $3.05 trillion. About two-thirds are estimated to be invested in dollars.
Beijing has repeatedly warned that loose US monetary policy threatens the dollar, but it has continued to accumulate dollar assets at the same time, adding about $260 billion of Treasury securities last year, according to US data.
Policymakers in Europe, where interest rates are rising and debt is being cut, have also voiced concern.
However Washington seems yo have a deaf ear. China is in the early stages of its own internal inflation and the ability to move forward in financing from the Treasury perspective may be pushed back to the FED merely printing dollars. We have gasoline up 75%, milk 33%, bread is up 25% and the list goes on. No inflation? Hardly! It is just that home sales prices are low, low demand, driven by back room money.
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