China may adjust its investment in US Treasuries while reductions in Treasury holdings is a tactical move, foreign exchange regulatory official Li Hongyan told reporters yesterday.

China needs to take ‘counter-cyclical’ steps to control large capital outflows, said Wang Chunying, spokeswoman for the State Administration of Foreign Exchange.

China’s outbound direct investment has been too much and too fast this year, Wang said.

The authorities could keep the yuan basically stable, central bank chief economist Ma Jun said at the same briefing, as optimism about the US dollar may be overdone.

President-elect Donald Trump yesterday appointed economist Peter Navarro, a fierce critic of China, as the head of a new national trade body.

As at October 2016, China held $1,115.7 billion of Treasury securities (October 2015: $1,254.8 billion), just slightly below Japan which holds $1,131.9 billion. Third-placed Ireland holds just $271 billion. (Additional reporting by Reuters)

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