According to media reports, the US Treasury Department recently released an international capital flow report showing that as of March this year, China and Japan were still the largest holders of overseas US bonds, of which Japan increased its holdings of US Treasury bonds by $5.9 billion in March, and China increased its holdings of US Treasury bonds by 20.5 billion US dollars, reaching a total of 869.3 billion US dollars.
This data shows that the scale of China's holdings has ended the "seven consecutive declines" momentum that began in July last year, and the above changes have aroused great concern from the outside world. At the same time, the Chinese Embassy in the United States announced that Chinese Minister of Commerce Wang Wentao will visit the United States next week.
It is reported that the Chinese high-level visit to the United States is at the invitation of Washington to attend the meeting of the Asia-Pacific Economic Organization of Commerce Ministers in Detroit, when Wang Wentao will meet with US Secretary of Commerce Raimondo and Trade Representative Dai Qi as planned.
The above information shows that after Wang Yi and US President National Security Adviser Sullivan met in Vienna last week, Sino-US relations began to show signs of relaxation, and the interrupted high-level dialogue between the two sides is gradually resuming, but at this critical point in time, the Biden administration still does not forget to create noise on the Taiwan issue.
The Office of the United States Trade Representative issued a statement saying that the US and Taiwan authorities have formally signed the first part of the agreement on the "US-Taiwan 21st Century Trade Initiative." Dai Qi said that this agreement will help U.S. companies export more goods to Taiwan and consolidate U.S.-Taiwan relations.
China has long said that it firmly opposes the signing of economic and trade agreements of sovereign significance between any country and the Taiwan authorities, urges the US side to immediately stop all forms of official exchanges with the Taiwan authorities, and will take measures to safeguard national sovereignty if it insists on going its own way.
It is not difficult to see that after the "Wang Sha meeting," the game between China and the United States on many issues has not shown a trend of decreasing. Although the size of our U.S. bond holdings ended the "seven consecutive declines" and began to increase their holdings slightly, just one month of data is not enough to prove that the overall trend of China's reduction of U.S. bonds has reversed.
The reason is simple: the Fed's March interest rate meeting stipulated that the target range of the federal funds rate was raised again from the current 4.5%-4.75% to 4.75%-5%, which will inevitably attract foreign investors, including China, to increase their holdings of US dollar short-term bonds.
Second, the data released by the United States will not list very specific holders, which makes the US debt increased by China's central bank, entities, and residents all belong to China, so China's round of increase in US debt is not completely sure that it is the official handwriting.
In addition, the United States most hopes that China will increase its holdings of long-term bonds rather than short-term bonds, which will help the United States improve bond liquidity, and it is actually inaccurate to judge the direction of Sino-US relations by whether China has increased its holdings of US bonds.
The basic fact is that the high inflation that the United States is experiencing is a combination of negative factors, one of which is the high tariffs imposed by the United States on China, which have not been absorbed by Chinese manufacturers and exporters who are sellers.
Instead, it is added to the cost and returned directly to U.S. importers as well as consumers. In view of the fact that the Biden administration has been overwhelmed by the anti-China strategy it has pursued in the past few years, the next high-level meeting between China and the United States cannot be ruled out to become a show for American politicians again.
In fact, what really deserves our attention is the first agreement reached between the United States and Taiwan under the framework of the "21st Century Trade Initiative", if you only look at the content, this is just an economic and trade agreement created to facilitate the United States to further dump goods into Taiwan, but the focus is not on the content, but in what capacity the Taiwan authorities are negotiating with the United States.
As mentioned above, we have always opposed official exchanges between the United States and the Taiwan authorities, and their collusion at the economic and trade level is essentially challenging the bottom line of the "one-China principle" and trying to promote the process of "seeking independence" at all levels.
One of the most important reasons why the "Taiwan independence" elements are arrogant, apart from their own short-sightedness and ignorance, is that the United States supports them behind them; so as long as the United States does not give up interfering in the Taiwan Strait issue for a single day, Sino-US relations will always face obstacles, and this responsibility must be fully borne by the United States.