China Should Trim US Treasury Holdings, Former PBOC Adviser Says.

According to a former adviser to China's central bank, China should gradually reduce its holdings of US Treasuries and increase imports to balance its foreign trade and mitigate its exposure to US debt risks. The US has accumulated $18 trillion in net overseas debt, which is equivalent to about 70% of its GDP, and this figure could rise to 100% as the budget deficit grows. The appeal of American debt to other countries is also declining due to the "weaponization" of the dollar by the US. China, as the second-largest foreign holder of US bonds, should trim its ownership of Treasuries by ceasing to purchase new notes after existing holdings mature. However, if China stops buying Treasuries, it will need to maintain trade and international payment balances and accept trade deficits for a period of time. China should also keep its monetary policy expansionary to ensure a relatively high economic growth rate and safeguard the safety of foreign exchange reserves and overseas assets. [Extracted from the article]