Beijing – China’s creation of a new company to invest a portion of its $1 trillion in foreign-exchange reserves will have no impact on Beijing’s holdings of U.S. dollar-denominated assets, Premier Wen Jiabao said Friday.
Wen made the comment at a news conference in response to a question about how the planned company would invest the reserves.
Some economists have suggested that China’s plans to diversify its investments could affect its substantial purchases of U.S. Treasurys, which help to finance the U.S. government budget deficit.
China is believed to keep as much as 70 percent of its reserves in U.S. Treasurys and other dollar-denominated assets.
“It is true that in China’s foreign-exchange reserves, U.S. dollar-denominated assets account for a large proportion,” Wen said.
“I can assure you that by instituting such a foreign-exchange company, it will not have an impact on the U.S. dollar-denominated assets,” Wen said
He gave no other details.
