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Analysis: China's $300 billion fund a wake-up call to U.S.
By Nick Edwards | Reuters –
BEIJING (Reuters) - China's plan for a new $300 billion sovereign wealth fund is as much a warning to Washington as it is a body blow to Brussels.
It's the clearest sign yet of Beijing's waning faith in bonds issued by Europe and the United States. Europe's festering debt debacle, record low yields on U.S. Treasuries and a depreciating dollar all add weight to the view in China that the time is ripe to change investment tack.
"China has decided that real assets are better than broken debt fix promises and low interest rates," says Paul Markowski, president of MES Advisers and a long-time external adviser to China's monetary policymakers on global financial markets.
Beijing has watched for two years as Europe's crisis has choked growth and demand in China's biggest export market and stoked default risks on the near $800 billion of euro zone government bonds it is estimated to own.
It has been a painful lesson.
After all, China had actively bought euro assets to guard its $3.2 trillion reserve pile against over-exposure to U.S. dollars, which have lost about a third of their value in the last 10 years as U.S. Treasury yields have sunk to record lows.
Full Hundred
http://news.yahoo.com/analysis-china...125611711.html
By Nick Edwards | Reuters –
BEIJING (Reuters) - China's plan for a new $300 billion sovereign wealth fund is as much a warning to Washington as it is a body blow to Brussels.
It's the clearest sign yet of Beijing's waning faith in bonds issued by Europe and the United States. Europe's festering debt debacle, record low yields on U.S. Treasuries and a depreciating dollar all add weight to the view in China that the time is ripe to change investment tack.
"China has decided that real assets are better than broken debt fix promises and low interest rates," says Paul Markowski, president of MES Advisers and a long-time external adviser to China's monetary policymakers on global financial markets.
Beijing has watched for two years as Europe's crisis has choked growth and demand in China's biggest export market and stoked default risks on the near $800 billion of euro zone government bonds it is estimated to own.
It has been a painful lesson.
After all, China had actively bought euro assets to guard its $3.2 trillion reserve pile against over-exposure to U.S. dollars, which have lost about a third of their value in the last 10 years as U.S. Treasury yields have sunk to record lows.
Full Hundred
http://news.yahoo.com/analysis-china...125611711.html
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