Bloomberg News estimates that the Chinese state now holds around $1.2 trillion in USA debt, an amount that has doubled over the last 10 years.
Crude oil prices jumped on Wednesday and settled near three-year highs after USA government data showed a drop in crude inventories and production, though the fall in the latter could be the result of extreme cold temperatures across the United States. Trump is facing decision time as deadlines approach over whether to slap tariffs on imports from steel and aluminum to solar panels, which would be clearly aimed at China.
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The speculation that China may reduce its buying in US bonds helped to underpin the euro, the most obvious alternative to the dollar for assets.
The dollar also dropped against most currencies and gold rose.
National Australia Bank strategist Alex Stanley said global demand for US Treasuries was a major risk to watch, "but one should be wary of extrapolating reports on China demand into views that yields are poised for an imminent surge higher".
"If we posit that in September or October much of this doesn't go away but it stops increasing, then the pressure for slightly higher yields is probably with us", he said.
"It's certainly more of a hawkish tilt in the minutes", said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto. In November, the United States formally opposed granting China market economy status under the World Trade Organization, a move that makes it more hard for other countries to impose anti-dumping measures on cheap Chinese imports.
The stakes may be higher now as tensions with the USA have been building since the election of President Donald Trump, who's been critical of the American trade deficit with China and other countries. "We don't rule out the possibility that Beijing will seek to increase yuan flexibility, but the shift in policy will likely be modest and highly dependent on market conditions".
SAFE officials noted that "the handling of China's foreign reserves investment in U.S. bonds is professionally managed according to market activity, on the basis of market conditions and investment needs".
But any attempts to use that power could hurt the dollar, damaging China's own USA holdings.
The U.S. central bank's preferred inflation measure, the personal consumption expenditures price index excluding food and energy, has undershot its target since May 2012.