CHINA: Yi Gang, the head of China’s foreign exchange reserve manager
reiterated the government’s cautious approach to exchange rate reform
and warned against attempts to politicize the its massive purchases of
U.S. Treasuries. Yi reaffirmed China’s commitment to Treasury purchases.
“The U.S. Treasury market is the world’s biggest while our foreign
exchange reserves are very large so you can imagine how important the
Treasury market is to us,” he said. He said China’s behavior in the
Treasury market is market driven and argued against them being
politicized. “We are responsible investors. This US Treasury investment
can be mutually beneficial for the US and China,” he said. Yi
acknowledged a broad spectrum of views at home and abroad on the
question of yuan reform but said China’s leaders have been clear that
“we will maintain a basically stable yuan at a reasonable and balanced
level.”