The Daily Proof - Bloomberg reported that Beijing is reviewing the composition of Chinese reserves and considering reducing their allocation to U.S. Treasury securities. China has been diversifying away from Treasuries for years, including increased allocations to gold, direct investments in private equity, hedge funds and high-quality, euro-denominated debt.
The Chinese leak is best understood as a shot across the bow in what is shaping up as a new currency and trade war between the U.S. and China.
The U.S. is preparing to slap tariffs and trade sanctions on China, so China was warning Washington that such actions might be met with retaliation.
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