NEW YORK |
(Reuters) - China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government, according to documents viewed by Reuters.
The relationship means the People's Bank of China buys U.S. debt using a different method than any other central bank in the world.
The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions.
China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn't been necessary.
The documents viewed by Reuters show the U.S. Treasury Department has given the People's Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011.
China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.
The change was not announced publicly or in any message to primary dealers.
"Direct bidding is open to a wide range of investors, but as a matter of general policy we do not comment on individual bidders," said Matt Anderson, a Treasury Department spokesman.
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Replies
No surprise, I keep waiting for China to take over all of our toll roads.
This is absurd! What other direct link are we going to give China?
Do you remember Bill Clinton's allowing our defense contractors to sell some of our missle guidance technology directly to China? Within months of that sale, China gained the ability to strike the U.S. West coast directly with their ICBM's launched directly from China.
Not long after came the sale of advanced computer technology. Microsoft CLEANED UP on that deal, as well.
Don't forget the W-88 warhead! It seems that the "progressives" think that it's not "fair" for the United States to have any sort of "advantage" over any other country. Think of these things as "Someone is making sure that the United States pays its 'fair share' to the 'global community'."
I understand when writing any column or letter it is time consuming so have to add
extra words. Still, in this country we had men and some women involved in the Korean War
and the Vietnam War. They fought the communist chinese. I never capitolize those last two
words, but I do always put "communist" or "chi com."
These dirty bugers still kill children just born and torture those citizens in their country who
do not go along to get along.
Jo Dermody