China_NP1 Losing_VVG Taste_NN1 for_IF Debt_NN1 From_II U.S._NP1 HONG_NP1 KONG_NP1 --_NN1 China_NP1 has_VHZ bought_VVN more_RRR than_CSN $1_NNU trillion_NNO of_IO American_JJ debt_NN1 ,_, but_CCB as_CSA the_AT global_JJ downturn_NN1 has_VHZ intensified_VVN ,_, Beijing_NP1 is_VBZ starting_VVG to_TO keep_VVI more_DAR of_IO its_APPGE money_NN1 at_II home_NN1 ,_, a_AT1 move_NN1 that_CST could_VM have_VHI painful_JJ effects_NN2 for_IF American_JJ borrowers_NN2 ._. 
The_AT declining_JJ Chinese_JJ appetite_NN1 for_IF United_NP1 States_NP1 debt_NN1 ,_, apparent_JJ in_II a_AT1 series_NN of_IO hints_NN2 from_II Chinese_JJ policy_NN1 makers_NN2 over_II the_AT last_MD two_MC weeks_NNT2 ,_, with_IW official_JJ statistics_NN due_JJ for_IF release_NN1 in_II the_AT next_MD few_DA2 days_NNT2 ,_, comes_VVZ at_II an_AT1 inconvenient_JJ time_NNT1 ._. 
On_II Tuesday_NPD1 ,_, President-elect_NNB Barack_NP1 Obama_NP1 predicted_VVD the_AT possibility_NN1 of_IO trillion-dollar_JJ deficits_NN2 "_" for_IF years_NNT2 to_TO come_VVI ,_, "_" even_RR after_II an_AT1 $800_NNU billion_NNO stimulus_NN1 package_NN1 ._. 
Normally_RR ,_, China_NP1 would_VM be_VBI the_AT most_RGT avid_JJ taker_NN1 of_IO the_AT debt_NN1 required_VVN to_TO pay_VVI for_IF those_DD2 deficits_NN2 ,_, mainly_RR short-term_JJ Treasuries_NN2 ,_, which_DDQ are_VBR government_NN1 i.o.u_NNU ._. 's_GE ._. 
In_II the_AT last_MD five_MC years_NNT2 ,_, China_NP1 has_VHZ spent_VVN as_RG much_DA1 as_CSA one-seventh_MF of_IO its_APPGE entire_JJ economic_JJ output_NN1 buying_VVG foreign_JJ debt_NN1 ,_, mostly_RR American_JJ ._. 
In_II September_NPM1 ,_, it_PPH1 surpassed_VVD Japan_NP1 as_II the_AT largest_JJT overseas_JJ holder_NN1 of_IO Treasuries_NN2 ._. 
But_CCB now_RT Beijing_NP1 is_VBZ seeking_VVG to_TO pay_VVI for_IF its_APPGE own_DA $600_NNU billion_NNO stimulus_NN1 --_NN1 just_RR as_CSA tax_NN1 revenue_NN1 is_VBZ falling_VVG sharply_RR as_CSA the_AT Chinese_JJ economy_NN1 slows_VVZ ._. 
Regulators_NN2 have_VH0 ordered_VVN banks_NN2 to_TO lend_VVI more_DAR money_NN1 to_II small_JJ and_CC medium-size_JJ enterprises_NN2 ,_, many_DA2 of_IO which_DDQ are_VBR struggling_VVG with_IW lower_JJR exports_NN2 ,_, and_CC to_II local_JJ governments_NN2 to_TO build_VVI new_JJ roads_NN2 and_CC other_JJ projects_NN2 ._. 
"_" All_DB the_AT key_JJ drivers_NN2 of_IO China_NP1 's_GE Treasury_NN1 purchases_NN2 are_VBR disappearing_JJ --_NN1 there_EX 's_VBZ a_AT1 waning_JJ appetite_NN1 for_IF dollars_NNU2 and_CC a_AT1 waning_JJ appetite_NN1 for_IF Treasuries_NN2 ,_, and_CC that_DD1 complicates_VVZ the_AT outlook_NN1 for_IF interest_NN1 rates_NN2 ,_, "_" said_VVD Ben_NP1 Simpfendorfer_NP1 ,_, an_AT1 economist_NN1 in_II the_AT Hong_NP1 Kong_NP1 office_NN1 of_IO the_AT Royal_JJ Bank_NN1 of_IO Scotland_NP1 ._. 
Fitch_VV0 Ratings_NN2 ,_, the_AT credit_NN1 rating_NN1 agency_NN1 ,_, forecasts_VVZ that_CST China_NP1 's_GE foreign_JJ reserves_NN2 will_VM increase_VVI by_II $177_NNU billion_NNO this_DD1 year_NNT1 --_NN1 a_AT1 large_JJ number_NN1 ,_, but_CCB down_RP sharply_RR from_II an_AT1 estimated_JJ $415_NNU billion_NNO last_MD year_NNT1 ._. 
China_NP1 's_GE voracious_JJ demand_NN1 for_IF American_JJ bonds_NN2 has_VHZ helped_VVN keep_VVI interest_NN1 rates_NN2 low_JJ for_IF borrowers_NN2 ranging_VVG from_II the_AT federal_JJ government_NN1 to_II home_NN1 buyers_NN2 ._. 
Reduced_VVN Chinese_JJ enthusiasm_NN1 for_IF buying_VVG American_JJ bonds_NN2 will_VM reduce_VVI this_DD1 dampening_JJ effect_NN1 ._. 
For_IF now_RT ,_, of_RR21 course_RR22 ,_, there_EX seems_VVZ to_TO be_VBI no_AT shortage_NN1 of_IO buyers_NN2 for_IF Treasury_NN1 bonds_NN2 and_CC other_JJ debt_NN1 instruments_NN2 as_CSA investors_NN2 flee_VV0 global_JJ economic_JJ uncertainty_NN1 for_IF the_AT stability_NN1 of_IO United_NP1 States_NP1 government_NN1 debt_NN1 ._. 
This_DD1 is_VBZ why_RRQ Treasury_NN1 yields_NN2 have_VH0 plummeted_VVN to_TO record_VVI lows_NN2 ._. 
(_( The_AT more_DAR investors_NN2 want_VV0 notes_NN2 and_CC bonds_NN2 ,_, the_AT lower_JJR the_AT yield_NN1 ,_, and_CC short-term_JJ rates_NN2 are_VBR close_JJ to_II zero_MC ._. )_) 
The_AT long-term_JJ effects_NN2 of_IO China_NP1 's_GE using_VVG its_APPGE money_NN1 to_TO increase_VVI its_APPGE people_NN 's_GE standard_NN1 of_IO living_NN1 ,_, and_CC the_AT United_NP1 States_NP1 '_GE becoming_VVG less_RGR dependent_JJ on_II one_MC1 lender_NN1 ,_, could_VM even_RR be_VBI positive_JJ ._. 
But_CCB that_DD1 rebalancing_NN1 must_VM happen_VVI gradually_RR to_II not_XX hurt_VVN the_AT value_NN1 of_IO American_JJ bonds_NN2 or_CC of_IO China_NP1 's_GE huge_JJ holdings_NN2 ._. 
Another_DD1 danger_NN1 is_VBZ that_CST investors_NN2 will_VM demand_VVI higher_JJR returns_NN2 for_IF holding_VVG Treasury_NN1 securities_NN2 ,_, which_DDQ will_VM put_VVI pressure_NN1 on_II the_AT United_NP1 States_NP1 government_NN1 to_TO increase_VVI the_AT interest_NN1 rates_NN2 those_DD2 securities_NN2 pay_VV0 ._. 
As_CSA those_DD2 interest_NN1 rates_NN2 increase_VV0 ,_, they_PPHS2 will_VM put_VVI pressure_NN1 on_II the_AT interest_NN1 rates_NN2 that_CST other_JJ borrowers_NN2 pay_VV0 ._. 
When_RRQ and_CC how_RRQ all_DB that_DD1 will_VM happen_VVI is_VBZ unknowable_JJ ._. 
What_DDQ is_VBZ clear_JJ now_RT is_VBZ that_CST the_AT impact_NN1 of_IO the_AT global_JJ downturn_NN1 on_II China_NP1 's_GE finances_NN2 has_VHZ been_VBN striking_VVG ,_, and_CC it_PPH1 is_VBZ having_VHG an_AT1 effect_NN1 on_II what_DDQ the_AT Chinese_JJ government_NN1 does_VDZ with_IW its_APPGE money_NN1 ._. 
The_AT central_JJ government_NN1 's_GE tax_NN1 revenue_NN1 soared_VVD 32_MC percent_NNU in_II 2007_MC ,_, as_CSA factories_NN2 across_II China_NP1 ran_VVD at_II full_JJ speed_NN1 ._. 
But_CCB by_II November_NPM1 ,_, government_NN1 revenue_NN1 had_VHD dropped_VVN 3_MC percent_NNU from_II a_AT1 year_NNT1 earlier_RRR ._. 
That_DD1 prompted_VVD Finance_NN1 Minister_NN1 Xie_NP1 Xuren_NP1 to_TO warn_VVI on_II Monday_NPD1 that_CST 2009_MC would_VM be_VBI "_" a_AT1 difficult_JJ fiscal_JJ year_NNT1 ._. "_" 
A_AT1 senior_JJ central_JJ bank_NN1 official_NN1 ,_, Cai_NP1 Qiusheng_NP1 ,_, mentioned_VVD just_RR before_II Christmas_NNT1 that_CST China_NP1 's_GE $1.9_NNU trillion_NNO foreign_JJ exchange_NN1 reserves_NN2 had_VHD actually_RR begun_VVN to_TO shrink_VVI ._. 
The_AT reserves_NN2 --_NN1 mainly_RR bonds_NN2 issued_VVN by_II the_AT Treasury_NN1 ,_, Fannie_NP1 Mae_NP1 and_CC Freddie_NP1 Mac_NP1 --_NN1 had_VHD for_RR41 the_RR42 most_RR43 part_RR44 been_VBN rising_VVG quickly_RR ever_RR since_CS the_AT Asian_JJ financial_JJ crisis_NN1 in_II 1998_MC ._. 
The_AT strength_NN1 of_IO the_AT dollar_NNU1 against_II the_AT euro_NN1 in_II the_AT fourth_MD quarter_NN1 of_IO last_MD year_NNT1 contributed_VVN to_II slower_JJR growth_NN1 in_II China_NP1 's_GE foreign_JJ reserves_NN2 ,_, said_VVD Fan_NN1 Gang_NN1 ,_, an_AT1 academic_JJ adviser_NN1 to_II China_NP1 's_GE central_JJ bank_NN1 ,_, at_II a_AT1 conference_NN1 in_II Beijing_NP1 on_II Tuesday_NPD1 ._. 
The_AT central_JJ bank_NN1 keeps_VVZ track_NN1 of_IO the_AT total_JJ value_NN1 of_IO its_APPGE reserves_NN2 in_II dollars_NNU2 ,_, so_RR a_AT1 weaker_JJR euro_NN1 means_VVZ that_CST euro-denominated_JJ assets_NN2 are_VBR worth_II less_DAR in_II dollars_NNU2 ,_, decreasing_VVG the_AT total_JJ value_NN1 of_IO the_AT reserves_NN2 ._. 
But_CCB the_AT pace_NN1 of_IO China_NP1 's_GE accumulation_NN1 of_IO reserves_NN2 began_VVD slowing_VVG in_II the_AT third_MD quarter_NN1 along_II21 with_II22 the_AT slowing_NN1 of_IO the_AT Chinese_JJ economy_NN1 ,_, and_CC appeared_VVD to_TO reflect_VVI much_RR broader_JJR shifts_NN2 ._. 
China_NP1 manages_VVZ its_APPGE reserves_NN2 with_IW considerable_JJ secrecy_NN1 ._. 
But_CCB economists_NN2 believe_VV0 about_RG 70_MC percent_NNU is_VBZ denominated_VVN in_II dollars_NNU2 and_CC most_DAT of_IO the_AT rest_NN1 in_II euros_NN2 ._. 
China_NP1 has_VHZ bankrolled_VVN its_APPGE huge_JJ reserves_NN2 by_II effectively_RR requiring_VVG the_AT country_NN1 's_GE entire_JJ banking_NN1 sector_NN1 ,_, which_DDQ is_VBZ state-controlled_JJ ,_, to_TO take_VVI nearly_RR one-fifth_MF of_IO its_APPGE deposits_NN2 and_CC hand_VV0 them_PPHO2 to_II the_AT central_JJ bank_NN1 ._. 
The_AT central_JJ bank_NN1 ,_, in_II turn_NN1 ,_, has_VHZ used_VVN the_AT money_NN1 to_TO buy_VVI foreign_JJ bonds_NN2 ._. 
Now_RT the_AT central_JJ bank_NN1 is_VBZ rapidly_RR reducing_VVG this_DD1 requirement_NN1 and_CC pushing_VVG banks_NN2 to_TO lend_VVI more_DAR money_NN1 in_II China_NP1 instead_RR ._. 
At_II the_AT same_DA time_NNT1 ,_, three_MC new_JJ trends_NN2 mean_VV0 that_CST fewer_DAR dollars_NNU2 are_VBR pouring_VVG into_II China_NP1 --_NN1 so_CS the_AT government_NN1 has_VHZ fewer_DAR dollars_NNU2 to_TO buy_VVI American_JJ bonds_NN2 ._. 
The_AT first_MD ,_, little-noticed_JJ trend_NN1 is_VBZ that_CST the_AT monthly_JJ pace_NN1 of_IO foreign_JJ direct_JJ investment_NN1 in_II China_NP1 has_VHZ fallen_VVN by_II more_DAR than_CSN a_AT1 third_MD since_CS the_AT summer_NNT1 ._. 
Multinationals_NN2 are_VBR hoarding_VVG their_APPGE cash_NN1 and_CC cutting_VVG back_RP on_II construction_NN1 of_IO new_JJ factories_NN2 ._. 
The_AT second_MD trend_NN1 is_VBZ that_CST the_AT combination_NN1 of_IO a_AT1 housing_NN1 bust_NN1 and_CC a_AT1 two-thirds_MF fall_VV0 in_II the_AT Chinese_JJ stock_NN1 market_NN1 over_II the_AT last_MD year_NNT1 has_VHZ led_VVN many_DA2 overseas_JJ investors_NN2 --_NN1 and_CC even_RR some_DD Chinese_JJ --_NN1 to_TO begin_VVI quietly_RR to_TO move_VVI money_NN1 out_II21 of_II22 the_AT country_NN1 ,_, despite_II stringent_JJ currency_NN1 controls_NN2 ._. 
So_RR much_RR Chinese_JJ money_NN1 has_VHZ poured_VVN into_II Hong_NP1 Kong_NP1 ,_, which_DDQ has_VHZ its_APPGE own_DA internationally_RR convertible_JJ currency_NN1 ,_, that_CST the_AT territory_NN1 announced_VVD Wednesday_NPD1 that_CST it_PPH1 had_VHD issued_VVN a_AT1 record_NN1 $16.6_NNU billion_NNO worth_NN1 of_IO extra_JJ currency_NN1 last_MD month_NNT1 to_TO meet_VVI demand_NN1 ._. 
A_AT1 third_MD trend_NN1 that_CST may_VM further_RRR slow_VVI the_AT flow_NN1 of_IO dollars_NNU2 into_II China_NP1 is_VBZ the_AT reduction_NN1 of_IO its_APPGE huge_JJ trade_NN1 surpluses_NN2 ._. 
China_NP1 's_GE trade_NN1 surplus_NN1 set_VVD another_DD1 record_NN1 in_II November_NPM1 ,_, $40.1_NNU billion_NNO ._. 
But_CCB because_CS prices_NN2 of_IO Chinese_JJ imports_NN2 like_II oil_NN1 are_VBR starting_VVG to_TO recover_VVI while_CS demand_NN1 remains_VVZ weak_JJ for_IF Chinese_JJ exports_NN2 like_II consumer_NN1 electronics_NN1 ,_, most_DAT economists_NN2 expect_VV0 China_NP1 to_TO run_VVI average_JJ trade_NN1 surpluses_NN2 this_DD1 year_NNT1 of_IO less_DAR than_CSN $20_NNU billion_NNO a_AT1 month_NNT1 ._. 
That_DD1 would_VM give_VVI China_NP1 considerably_RR less_RRR to_TO spend_VVI abroad_RL than_CSN the_AT $50_NNU billion_NNO a_AT1 month_NNT1 that_CST it_PPH1 poured_VVD into_II international_JJ financial_JJ markets_NN2 --_NN1 mainly_RR American_JJ bond_NN1 markets_NN2 --_NN1 during_II the_AT first_MD half_NN1 of_IO 2008_MC ._. 
"_" The_AT pace_NN1 of_IO foreign_JJ currency_NN1 flows_VVZ into_II China_NP1 has_VHZ to_TO slow_VVI ,_, "_" and_CC therefore_RR the_AT pace_NN1 of_IO China_NP1 's_GE reinvestment_NN1 of_IO that_DD1 foreign_JJ currency_NN1 in_II overseas_JJ bonds_NN2 will_VM also_RR slow_VVI ,_, said_VVD Dariusz_NP1 Kowalczyk_NP1 ,_, the_AT chief_JJ investment_NN1 officer_NN1 at_II SJS_NP1 Markets_NN2 Ltd._JJ ,_, a_AT1 Hong_NP1 Kong_NP1 securities_NN2 firm_NN1 ._. 
Two_MC officials_NN2 of_IO the_AT People_NN 's_GE Bank_NN1 of_IO China_NP1 ,_, the_AT nation_NN1 's_GE central_JJ bank_NN1 ,_, said_VVD in_II separate_JJ interviews_NN2 that_CST the_AT government_NN1 still_RR had_VHD enough_DD money_NN1 available_JJ to_TO buy_VVI dollars_NNU2 to_TO prevent_VVI China_NP1 's_GE currency_NN1 ,_, the_AT yuan_NNU ,_, from_II rising_VVG ._. 
A_AT1 stronger_JJR yuan_NNU would_VM make_VVI Chinese_JJ exports_NN2 less_RGR competitive_JJ ._. 
For_IF a_AT1 combination_NN1 of_IO financial_JJ and_CC political_JJ reasons_NN2 ,_, the_AT decline_NN1 in_II China_NP1 's_GE purchases_NN2 of_IO dollar-denominated_JJ assets_NN2 may_VM be_VBI less_RGR steep_JJ than_CSN the_AT overall_JJ decline_NN1 in_II its_APPGE purchases_NN2 of_IO foreign_JJ assets_NN2 ._. 
Many_DA2 Chinese_JJ companies_NN2 are_VBR keeping_VVG more_DAR of_IO their_APPGE dollar_NNU1 revenue_NN1 overseas_RL instead_II21 of_II22 bringing_VVG it_PPH1 home_RL and_CC converting_VVG it_PPH1 into_II yuan_NNU to_TO deposit_VVI in_II Chinese_JJ banks_NN2 ._. 
Treasury_NN1 data_NN from_II Washington_NP1 also_RR suggests_VVZ the_AT Chinese_JJ government_NN1 might_VM be_VBI allocating_VVG a_AT1 higher_JJR proportion_NN1 of_IO its_APPGE foreign_JJ currency_NN1 reserves_NN2 to_II the_AT dollar_NNU1 in_II recent_JJ weeks_NNT2 and_CC less_RRR to_II the_AT euro_NN1 ._. 
The_AT Treasury_NN1 data_NN suggests_VVZ China_NP1 is_VBZ buying_VVG more_DAR Treasuries_NN2 and_CC fewer_DAR bonds_NN2 from_II Fannie_NP1 Mae_NP1 or_CC Freddie_NP1 Mac_NP1 ,_, with_IW a_AT1 sharp_JJ increase_NN1 in_II Treasuries_NN2 in_II October_NPM1 ._. 
But_CCB specialists_NN2 in_II international_JJ money_NN1 flows_VVZ caution_NN1 against_II relying_VVG too_RG heavily_RR on_II these_DD2 statistics_NN ._. 
The_AT statistics_NN mostly_RR count_VV0 bonds_NN2 that_CST the_AT Chinese_JJ government_NN1 has_VHZ bought_VVN directly_RR ,_, and_CC exclude_VV0 purchases_NN2 made_VVN through_II banks_NN2 in_II London_NP1 and_CC Hong_NP1 Kong_NP1 ;_; with_IW the_AT financial_JJ crisis_NN1 weakening_VVG many_DA2 banks_NN2 ,_, the_AT Chinese_JJ government_NN1 has_VHZ a_AT1 strong_JJ incentive_NN1 to_TO buy_VVI more_DAR of_IO its_APPGE bonds_NN2 directly_RR than_CSN in_II the_AT past_NN1 ._. 
The_AT overall_JJ pace_NN1 of_IO foreign_JJ reserve_JJ accumulation_NN1 in_II China_NP1 seems_VVZ to_TO have_VHI slowed_VVN so_RG much_DA1 that_CST even_CS21 if_CS22 all_DB the_AT remaining_JJ purchases_NN2 were_VBDR Treasuries_NN2 ,_, the_AT Chinese_JJ government_NN1 's_GE overall_JJ purchases_NN2 of_IO dollar-denominated_JJ assets_NN2 will_VM have_VHI fallen_VVN ,_, economists_NN2 said_VVD ._. 
China_NP1 's_GE leadership_NN1 is_VBZ likely_JJ to_TO avoid_VVI any_DD complete_JJ halt_NN1 to_II purchases_NN2 of_IO Treasuries_NN2 for_II31 fear_II32 of_II33 appearing_VVG to_TO be_VBI torpedoing_VVG American_JJ chances_NN2 for_IF an_AT1 economic_JJ recovery_NN1 at_II a_AT1 vulnerable_JJ time_NNT1 ,_, said_VVD Paul_NP1 Tang_NN1 ,_, the_AT chief_JJ economist_NN1 at_II the_AT Bank_NN1 of_IO East_ND1 Asia_NP1 here_RL ._. 
"_" This_DD1 is_VBZ a_AT1 political_JJ decision_NN1 ,_, "_" he_PPHS1 said_VVD ._. 
"_" This_DD1 is_VBZ not_XX purely_RR an_AT1 investment_NN1 decision_NN1 ._. "_" 
