One of China’s biggest bankers says U.S. Treasuries are still the best investment despite Standard & Poor’s downgrade.
“Holding U.S. Treasuries contains certain risks, but at a time when the global economy is volatile and the Euro-zone is in deep difficulties, U.S. Treasuries, among all the not-so-ideal products, remain as the best product in terms of safety and returns,” Guo Shuqing, chairman of China Construction Bank, told Capital Week, according to Reuters.
Guo also said that China, the largest U.S. debt holder, holds most of its reserves in dollar assets because of “historical reasons as well as realistic needs.”“
“The market is telling us that the possibility for a U.S. default is small although short-term fluctuations are inevitable,” Guo said, according to Reuters.
The U.S. Treasury recently reported that China increased its Treasury holdings in June from $5.7 billion to $1.166 trillion. Reuters also reported that Guo said U.S. Treasury bonds have remained stable or some decreased after the S & P downgrade.
Vice President Joe Biden is set visit China this week at the invitation of Chinese Vice President Xi Jinping.
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