Chinese economists say US Treasury bonds are still the best way for China to invest its US$1.9 trillion foreign exchange reserves, state media reported. This week China replaced Japan as the top holder of US Treasury debt, with holdings amounting to US$585 billion. Dong Yuping, senior economist at the Institute of Finance and Banking, said that, despite the economic crisis, such investments still carry the smallest amount of risk, and China may not have many other options. Chen Gong, chief economist and chairman of Anbound Group, a Beijing-based consulting firm, noted that the potential returns on these bonds will rise now other countries are increasingly seeking refuge in US government debt.
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