Secondly, for China's trillions of foreign exchange reserves, we have no other investment place except US Treasury bonds. Finally, US Treasury bonds are bearer, and we can buy and sell them freely according to our own needs.
The reasons for buying US Treasury bonds are:
1, which requires investment.
National debt is a bond issued on the basis of national credit, that is, American national debt is guaranteed by the reputation of the United States. At the same time, the United States is a superpower with a developed economy. The risk of buying its national debt is small and the yield is stable. It is a relatively stable investment.
2. Avoid shrinking foreign exchange.
As the US dollar acts as the world currency, China can avoid shrinking foreign exchange to some extent by buying US Treasury bonds.
3. International strategic considerations
China holds a large number of U.S. Treasury bonds, which, to a certain extent, binds China's economy with the U.S. economy and is beneficial to China's economic development.
4. Liquidity of US Treasury bonds
The liquidity of US Treasury bonds is the best, because the financial industry in the United States is the most developed in the world, and all major financial institutions are investing in US Treasury bonds, that is, everyone holds US debt, so US debt can be easily realized in the market and can be converted into US dollars at any time.
The functions of purchasing US Treasury bonds are as follows:
Low risk: the risk of national debt is low, and the United States is a big country and more secure;
Stabilizing foreign exchange: the US economy is growing steadily, and the US dollar is the international currency. Buying US Treasury bonds can increase foreign exchange and avoid shrinking foreign exchange;
National strategic interests: China has a large number of US dollar assets, and the United States must attach importance to China and achieve equal dialogue;
International stability: as a developing country, it needs stability more, so as to stabilize the United States and achieve a win-win situation;
Stabilize financial markets: safeguard national economic security and guard against financial risks.
National debt is a special form of debt, which has the following characteristics compared with the general creditor-debtor relationship:
From the perspective of the subject of legal relationship
The creditors of national debt can be citizens, legal persons or other organizations at home and abroad, or the government and international financial organizations of a certain country or region, while the debtors can only be countries.
Judging from the nature of legal relationship
The occurrence, change and elimination of the legal relationship of national debt mostly reflect the unilateral will of the state. Although the legal relationship of national debt is equal to other financial legal relationships, it shows a certain subordinate relationship compared with the general creditor-debtor relationship, which is more obvious in the legal relationship of domestic debt.
From the realization of legal relationship
National debt is the creditor-debtor relationship with the highest credit rating and the best security.
From the debtor's point of view
National debt is voluntary, paid and flexible.
From the creditor's point of view
National debt has the characteristics of security, profitability and liquidity.