The Biden administration got what it wanted, and China increased its holdings of U.S. bonds by 34.3 billion. In less than 24 hours, the US passed a Xinjiang-related bill, and the provocation has intensified. Why is China increasing its holdings of U.S. bonds, and what signal does the Xinjiang-related bill passed by the U.S. side send?
According to U.S. media reports, on February 15, local time, the U.S. Treasury Department released the December 2023 International Capital Flows Report, which showed that Japan and China are currently the two largest overseas holders of U.S. Treasury bonds. Among them, Japan's U.S. bond holdings were $1.1382 trillion, the highest since August 2022, an increase of $10.7 billion from the previous month.
China's holdings of U.S. bonds reached $816.3 billion, up $34.3 billion from the previous month. The reason why the news of China's increase in U.S. bonds has attracted great attention from the outside world is mainly due to the following two reasons: First, this is the second consecutive month of increasing holdings of U.S. bonds after reducing its holdings of U.S. bonds for seven consecutive months. Second, the total holdings exceeded $800 billion, shaking off a fourteen-year low.
Some analysts believe that the increase in U.S. bonds reflects China's multiple strategic considerations. First of all, from the perspective of interests, the purpose of China's increase in US debt is naturally to make money. Affected by multiple factors, the investment-income ratio of U.S. bonds has continued to rise in the past three months, and it is not surprising that China has chosen to increase its holdings of U.S. bonds in order to be able to make more profits.
Secondly, from the perspective of overseas asset allocation, increasing holdings of U.S. bonds is undoubtedly a very suitable choice. Affected by the Ukraine crisis and the new round of Palestinian-Israeli military conflict, the current global security, political and economic situation has been greatly affected, so in this context, ensuring the proper allocation of China's overseas assets has become a core task, which requires not only more profit growth points, but also security and stability.
Increasing the holdings of U.S. bonds is a move to flexibly allocate China's overseas assets, and it is also an important consideration. Finally, from the perspective of the easing of Sino-US relations, the increase in US debt holdings is equivalent to sending a clear signal of goodwill from China to the United States, and the tensions between the two countries have been effectively eased after the San Francisco meeting between the Chinese and US heads of state last year.
Now that China has increased its holdings of U.S. bonds, it has told the Biden administration that China has shown the corresponding sincerity and attitude, and the next step is to see the performance of the United States. However, what is unexpected is that in the face of China's goodwill signal, the US side made an extremely irrational and wrong move.
On February 16, local time, the U.S. House of Representatives passed a Xinjiang-related bill, which can only be described in one word, that is, "thieves shout to catch thieves". Over the past decade or so, the United States has repeatedly hyped up Xinjiang-related issues, using "human rights, ethnicity and religion" as an excuse to criticize and criticize China, and tried to use international public opinion to exert pressure on China and force China to make compromises and concessions on some issues of core interests.
According to the analysis, the passage of the Xinjiang-related bill by the US House of Representatives is on the one hand to continue to add to China's blockage and create incidents, and on the other hand, it is to reduce the attention of the international community to it. Some experts pointed out that the introduction of the Xinjiang-related bill is not because the United States really cares about Xinjiang, but because the United States needs to hype up and exaggerate the so-called "Xinjiang human rights issue", and only in this way can it ensure that the United States has cards in its hands to play.
If it had been in the past, the U.S. plan to slander and spill dirty water on China in the international community might have really succeeded, but now that it's 2024, it's clear to all countries around the world who is right and who's wrong, and the international community has its own clear judgment and thinking ability, so the U.S. hype up Xinjiang-related issues is doomed to failure.