Beijing vows not to use U.S. debt for political gain (fingers crossed)

A top Chinese official said Tuesday that Beijing will not use its vast holdings of U.S. government debt for political gain, just a few days after a forecast projected that the U.S. national debt is on course to triple to $20 trillion over the next decade.

China holds the world's largest cache of foreign exchange reserves, which soared more than $450 billion last year to reach $2.4 trillion at year's end. Concerns about Beijing's plans for its holdings have peaked in recent weeks after Chinese military officials suggested using that debt to pressure the United States in other policy areas.

But a top Chinese state financial officer Tuesday rejected that approach.

"The U.S. Treasury market is the world's largest government bond market," said Yi Gang, the head of the State Administration of Foreign Exchange. "Our foreign exchange reserves are huge, so you can imagine that the U.S. Treasury market is important to us," he said during the annual session of China's parliament.

Mr. Yi emphasized his hope that China's investment in U.S. Treasury securities would not become a political football.

"This is purely market-driven investment behavior. I would hope not to see this matter politicized," he said in response to a question about American concerns that Beijing's holdings of U.S. debt posed a political threat. "China is a responsible investor, and we fully believe such investments can be mutually beneficial."

Mr. Yi expressed those views one month after a senior military official in the People's Liberation Army recommended using economic measures to retaliate against a $6 billion arms package that the United States agreed to sell to Taiwan. ...

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