According to Asia Times Online, China has given orders to sell anything not nailed to the floor (i.e. government-backed).
Dollar-denominated risk assets, including asset-backed securities and corporates, are no longer wanted at the State Administration of Foreign Exchange (SAFE), nor at China’s large commercial banks. The Chinese government has ordered its reserve managers to divest itself of riskier securities and hold only Treasuries and US agency debt with an implicit or explicit government guarantee.
Not sure how credible this is, but it’s entirely plausible given recent spats between US and China. Also, if this is true, the motive is unclear. Is it a simple re-allocation of capital? Or is it an eye for a Taiwan-weapons-dealing eye?
Source: Asia Times
