China will continue to buy US Treasuries, viewing the credit risk as low overall, a senior central bank official said on Monday.
"Investing in American Treasuries, as an important part of our foreign exchange reserve management, will continue," Hu Xiaolian, a vice governor of the People's Bank of China, told a news conference on China's preparations for next month's G20 summit in London.
Premier Wen Jiabao said on March 13 that he was worried about China's heavy exposure to the United States.
Bankers assume about two-thirds of China's nearly $2 trillion in reserves is parked in dollar assets, primarily US government and other bonds.
Hu, who is also head of the State Administration of Foreign Exchange, said China would pay close attention to changes in the value of its Treasury holdings.
"US Treasuries are an important part of our foreign exchange reserves. So we naturally care about the security and investment return on US Treasuries," she said.
Turning to the dollar, Hu disputed the argument heard in some circles that the US economy and markets are in such deep trouble that the dollar's global supremacy is under threat.
She said China's view was that studies could begin of a multi-polar global currency system but that the dollar remained the key currency in terms of trade, settlement, payments and pricing.
The dollar also dominated financial investment. That was why China, though favoring research into a new multi-currency system, believes the current priority is to step up supervision of the US economy and its financial markets, Hu said.
On the currency composition of China's reserves, she said the central government took long-term factors into account such as the structure of China's payments and trade; the risks and returns on various currencies; and the liquidity of different currencies.
China would not be swayed in determining the make-up of its portfolio by short-term volatility in currency markets, she said.