Beijing: China will continue buying US government debt while paying close attention to possible fluctuations in the value of those assets, a vice governor of Beijing's central bank said on Monday.
Investing in US Treasury bills is "an important component part of China's foreign currency reserve investments," People's Bank of China Vice Governor Hu Xiaolian said at a news conference yesterday.
"So as an important component we are naturally relatively concerned with the safety and profitability of US government bonds," Hu said - a statement apparently aimed at concerns that rising debt to fund Washington's stimulus package could spur inflation and weaken the dollar.
China is Washington's biggest foreign creditor, holding an estimated $1 trillion in US government debt. A weaker dollar would erode the value of those assets.
Hu's comments follow remarks earlier this month from Chinese Premier Wen Jiabao that he was "a little bit worried" about China's holdings of US government debt. Wen called on the US to honour its commitments, remain credit-worthy, and ensure the safety of Chinese assets.
China's investments are likely to be a major topic of discussion when Chinese President Hu Jintao meets with President Barack Obama on the sidelines of an April 2 summit in London of the Group of 20 major economies called to discuss remedies for the global financial crisis.
The meeting will be the first face-to-face encounter between the two men, and a top Chinese diplomat appearing alongside Hu Xiaolian sought to set a positive tone for the talks.
China-US relations have gotten off to an "excellent start" under Obama, Vice Foreign Minister He Yafei said, appearing to rule out any lasting damage from a confrontation earlier this month between Chinese boats and an unarmed US Navy surveillance ship off China's southeastern coast.
China accused the USNS Impeccable ship of operating illegally within its exclusive economic zone, while the US said the Chinese boats had acted dangerously in blocking its passage and later assigned a destroyer to escort the ship.
He said Hu and Obama planned to discuss the global economic crisis, bilateral ties, and regional and global issues such as plans by North Korea to launch missile and Iran's nuclear programme.