The Federal Reserve building is seen in Washington, US, Jan 26, 2022. [Photo/Agencies]

A noticeable change seen in recent times is the fall in many central banks’ holdings of US Treasury bonds. The two largest US bond holders, Japan and China, have been reducing their holdings for three and six months. Yet these two countries are not the only ones to do so. At least 19 other governments, including those of Brazil and Vietnam, have also sold significant portions of their US Treasury bonds since May.

Why?

Three main factors are at play. A direct cause is the expectation of further rate hikes by the US Federal Reserve — higher rates mean lower bond prices. So, home holders are better off offloading some bonds when prices are high.

A second reason is to bolster the currency value. The US dollar has appreciated significantly since the Fed started hiking interest rates in March. The trend is expected to continue, exerting immense downward pressure on other currencies.

Depreciation of the local currency benefit exports yet it depresses imports at the same time. And now that prices of energy, food and raw materials have reached historical highs due to the Ukraine-Russia conflict and countries in Europe and Asia are under tremendous pressure of ensure imports, they can get close to the exchange rate they want by buying and selling dollars.

The third reason is the countries’ efforts to diversify from dollar assets. Israel is one such example of a country reducing US Treasury bond holdings while increasing its assets in yuan, Canadian dollars, Australia dollars and yen.

Indeed, capital released from the US bond market has been reallocated to other markets. And China has become an emerging destination for capital inflow, as overseas investors can more easily buy and sell stocks and bonds in the Chinese mainland’s markets. Besides, Chinese government bonds and share stocks have been included in all major global benchmarks, including the Morgan Stanley Capital International equity indices and the Bloomberg Barclays bond index, and institutional investors who track those indices would automatically increase their holdings of yuan-denominated assets.

What will be the impact of these developments?

Despite the recent sale of US Treasury bonds, the dollar’s hegemony has not been challenged in a fundamental manner. The US issues the world’s primary reserve currency, which effectively makes treasuries safe assets, particularly during uncertain times.

The appetite for US treasuries remains apparent in recent market movements. While governments are busy selling US government bonds, individual investors are busy buying in. In May, governments around the world sold $34 billion worth of US Treasury bonds, with individuals buying $134 billion of bonds. Global investors rushed to safe assets, mostly US treasuries, due to persistently high inflation and volatile stock markets. Therefore, net selling has not been as dramatic — and the private flight to safety has partly sopped up the new supply of treasuries from government sales.

Nonetheless, the decline in many countries’ holdings of US government bonds suggests a shift in the mindset of many central banks. The US has been increasingly imposing financial sanctions on other countries, such as Russia and Iran, to settle disputes and differences, making any country that has a dispute with US vulnerable.

Add to another layer of uncertainty because of US elections, in addition to the bumpy post-pandemic recovery, to realize the challenges that lie ahead of countries around the world. It is thus no surprise that governments want to diversify, at least partly, away from dollar reserves.

In fact, the dollar will face more competition in the future, not just from other fiat currencies, but also from cryptocurrencies. Saudi Arabia, for instance, has reduced its holdings of US treasuries by nearly 40 percent since early 2020 and experimented settling some international transaction using cryptocurrencies. As the world’s most important oil exporter, Saudi Arabia’s reduction of US government bonds has far-reaching impacts, because the transactions for oil and most other commodities are still settled in dollars.

Russia, too, has been urging European countries to use the ruble payment system to buy Russian gas in order to circumvent the US financial sanctions. In the end, a country’s economic clout and financial innovation capacity determines its currency’s supremacy. The US has no monopoly in this regard.

The author is chief economist at Hang Seng Bank China.

The views don’t necessarily reflect those of China Daily.

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.

 

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Four hours into the hearing, after asking a question about restrictions on the airspace over Disney amusement parks, Nehls switched gears, presenting a picture of Biden speaking, with a caption mocking the president for a speech last month in which he stuttered over a word.

“We now see the mainstream media questioning President Biden’s mental state, and for good reason,” Nehls said. “Sadly, he shakes hands with ghosts and imaginary people, and he falls off bicycles,” the congressman added, referring to the president’s fall during a morning bike ride last month near his vacation home in Delaware.

“Have you spoken to Cabinet members about implementing the 25th Amendment on President Biden?” Nehls then asked.

“First of all, I’m glad to have a president who can ride a bicycle,” Buttigieg replied.

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On Tuesday, the administration announced a multi-agency plan to create hundreds of registered apprenticeship programs with the private sector to flesh out the nation’s cybersecurity workforce — and defend against a rising tide of data breaches, ransomware attacks and other hacking incidents.

In a 120-day sprint, the US government will work with employers to establish apprenticeship programs in the cybersecurity industry, said Labor Secretary Marty Walsh, vowing to launch the joint program with the Department of Commerce “in as little as 48 hours.”

The initiative draws funding from a wider $500 million Commerce Department program known as the Good Jobs Challenge, and will particularly focus on recruiting young people, women and minorities to train and work in the cybersecurity field, said Walsh and Commerce Secretary Gina Raimondo at a White House event on Tuesday focused on broader cyber workforce issues.

The US government commitment highlights what officials describe as a critical lack of cybersecurity professionals in both government and the private sector who can help protect the nation from foreign adversaries and cybercriminals. Months ago, there were an estimated 500,000 unfilled cybersecurity positions in the United States, Raimondo said, but today that figure has exploded to more than 700,000, a 40% increase.

In recent years, a steady drumbeat of cyberattacks targeting government agencies, financial institutions, health care and other sectors have demonstrated the country’s vulnerabilities in cyberspace, showcasing a lack of trained IT security professionals and alarming experts who have spent years tracking the growth of hacker groups.

“The cybersecurity talent shortage is one of the most significant and threatening challenges facing our industry today. We all need to think differently about the problem,” said Barbara Massa, executive vice president at the cybersecurity firm Mandiant. “We need more cyber professionals entering the career field. And a cybersecurity career should be in reach for anyone who wishes to pursue it. We need more pathways to cyber careers and we need them as soon as possible.”

To meet the increased demand for cybersecurity defenders, the country cannot depend on legacy talent pipelines, US officials argued, saying that the glut of open job listings provides opportunities to all Americans but particularly to historically underrepresented groups.

“We’re not going to find 700,000 people if we’re only looking for white men. It’s not going to happen,” Raimondo said.

Amb. Susan Rice, the White House domestic policy advisor, said women account for less than a quarter of the country’s cyber workforce, with 9% of the workforce identifying as Black and just 4% as Hispanic.

“America is safer and stronger when we bring everyone to the table,” Rice said, before referring to one notable example of a company hit by a ransomware attack. “Helping a company like Colonial Pipeline protect itself [means] building a much better cybersecurity job pipeline.”

National Cyber Director Chris Inglis told CNN on Tuesday the United States is currently only able to fill about two-thirds of all cyber job openings being added to the industry each year, resulting in the increase in vacancies.

“It’s going to take a little bit longer to arrest its upward climb before we bend it and we trend it down,” he said. “But we’re very aggressive about this, and I think we can make a substantial difference in months or a few years’ time as opposed to having this be with us for the next generation.”

In the coming months, he added, the US government expects to publish a national cyber workforce strategy that will lay a foundation for further training and development.

As part of Tuesday’s summit, dozens of businesses and organizations descended on the White House to discuss how to expand the nation’s cybersecurity workforce. The list of attendees included tech companies such as Amazon and Google; cybersecurity firms such as Mandiant and Fortinet; and businesses that consumers interact with daily, such as Bank of America and Walmart.

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When American journalist Brent Renaud was fatally shot in Ukraine in March, the State Department angrily — and quickly — blamed Russia. “We are horrified,” spokesperson Ned Price said. “This is yet another gruesome example of the Kremlin’s indiscriminate actions.”

When President Biden visited Saudi Arabia last week, the White House initially declined to say ahead of the meeting whether he would raise the murder of journalist Jamal Khashoggi with Saudi leaders. Later, under pressure, Biden said he had been “straightforward and direct” with them.

And in Israel, Biden did not publicly mention the death of Palestinian American journalist Shireen Abu Akleh, who was killed while covering an Israeli raid in the West Bank, until he met with Palestinian leaders in the second part of his visit and called for a “full and transparent accounting” of her death.

Biden’s handling of the killings of the three journalists reflects what has become a central dilemma of his foreign policy: how to keep his promise of restoring human rights to a marquee role while at the same time urgently building a world coalition against Russia and China.

The president has repeatedly outlined his soaring vision of a global struggle between democracy and autocracy, but that does not always yield an obvious path forward. It is always harder for a president to chastise governments that are allies or partners, and that has certainly been true in the Middle East, where the United States has long supported authoritarians for strategic gain.

These crosscurrents were on full display during Biden’s recent trip to the region, and nowhere more so than in the president’s wrestling with the fate of Khashoggi and Abu Akleh. In both Saudi Arabia and Israel, Biden at first visibly held back from outspoken denunciations or public pressure, though in both cases he circled back to raise the issue.

The cases are different. U.S. intelligence agencies have concluded that Saudi Crown Prince Mohammed bin Salman, the country’s de facto ruler, ordered the murder and dismemberment of Khashoggi, an outspoken critic of the crown prince. Abu Akleh was probably killed by the Israeli military while covering a news event.

Palestinian authorities released an investigation saying the Israelis had killed her intentionally. Israel, which has yet to release the results of its own inquiry, has said it is not sure who killed her but if it was an Israeli soldier, it was an accident. The United States also has called the killing unintentional.

Human rights activists widely charged that Biden had fallen short in both countries. His “effective subordination of human rights in both Israel and Saudi Arabia shows why skepticism is flourishing regarding Biden’s commitment to human rights when anything else is at stake,” said Kenneth Roth, executive director of Human Rights Watch.

John Kirby, a White House communications official, defended Biden’s decision to visit Jiddah — suggesting it was the best way to confront the kingdom on human rights — and said that Biden was “comfortable” with the steps the United States has taken to hold Saudi officials accountable, including sanctions.

“You can’t advance human rights, and you can’t say that it’s a part of your foreign policy, and not go,” he told NPR on Monday.

Biden has previously spoke forcefully about Khashoggi’s killing, vowing to make Saudi Arabia a “pariah” while campaigning in 2019 and releasing an intelligence report that found Mohammed responsible for the killing.

Last week, after meeting with the crown prince in Jiddah — and facing criticism for greeting him with a fist bump — Biden said he had told the crown prince in a “straightforward and direct” way that the killing was unacceptable and made “clear what I thought of it at the time and what I think of it now.”

That did not satisfy those close to Khashoggi. Hatice Cengiz, Khashoggi’s fiancee, tweeted a picture of the president fist-bumping the crown prince and said the blood of Mohammed’s “next victim” was on Biden’s hands.

Biden was more cautious with Abu Akleh, who was killed in May. He did not publicly address her killing while in Israel.

Abu Akleh’s family criticized Biden for refusing to meet with them, and for not publicly mentioning her — an American citizen — during a friendly news conference with Israel’s prime minister. “He should have talked about her,” Lina Abu Akleh, the journalist’s niece, said in an interview.

The Committee to Protect Journalists said Biden’s visit left journalists in the Middle East and around the world “more vulnerable after this trip.”

“The U.S. effectively shrugged its shoulders over the killing of Saudi journalist Jamal Khashoggi, did not push for the release of journalists jailed in Saudi Arabia and Egypt, and did not commit to an FBI-led investigation into the killing of Palestinian American journalist Shireen Abu Akleh,” the group said.

Complicating matters, Saudi state media reported that the crown prince brought up Abu Akleh during his meeting with Biden, suggesting the president was guilty of a double standard for harping on Khashoggi’s death while going easy on the Israelis.

And in comments that gave little hope of a change in course, Adel al-Jubeir, the Saudi minister of state for foreign affairs, suggested on Saturday that political opponents could merit the same response as violent extremists. “What you may call a dissident we may call a terrorist,” Jubeir said in an interview with the BBC. “What you may call somebody expressing their opinion we may call incitement.”

As a candidate, Biden pointedly rejected the legacy of his predecessor, Donald Trump, who openly spoke about the need for the United States to stand by autocratic allies, even at the expense of raising human rights.

“Our friends will never question our support,” Trump said at a meeting of Muslim-majority nations in Saudi Arabia in 2017.

Biden’s promise to act differently, and to restore U.S. leadership as a champion of human rights, has led to accusations of betrayal from advocates and charges that the United States is doubling down on a familiar formula — valuing stable alliances over its stated values.

Biden spoke last week in Jiddah to a group of Arab leaders about America’s partnerships in the Middle East, saying, “The United States is not going anywhere.” His audience included some heads of highly repressive regimes.

The aftermath of Abu Akleh’s killing is still unfolding. The United Nations found that “several single, seemingly well-aimed bullets” were fired at her and three other journalists from the direction of Israeli forces. The finding that Israeli troops were likely to have fired the fatal shots mirrored the conclusions of several independent investigations, including a review by The Washington Post.

A U.S. State Department report found the bullet that killed Abu Akleh was likely to have been fired by a member of the Israeli military but did not appear to be intentional. Human rights advocates have been critical of the U.S. assessment, which stated that the bullet that killed Abu Akleh was too badly damaged to be definitively analyzed. That assessment also has been criticized by Israelis and Palestinians alike.

How Shireen Abu Akleh was killed

While Khashoggi’s killing — in the Saudi consulate in Istanbul — left a trail of flight information and other verifiable information, a senior State Department official, who spoke on the condition of anonymity to describe internal deliberations, said the Abu Akleh incident was harder to document after the fact, so the administration had to rely on earlier investigations by Palestinian and Israeli authorities.

Despite appeals from Democratic lawmakers and Abu Akleh’s family for additional steps to establish definitively what occurred, the administration does not appear to be moving to involve the FBI or other U.S. law enforcement agencies.

The senior official said the administration is doing what it can to pursue justice. “In both cases we’ve absolutely called for accountability,” the official said, adding, “when there are appropriate investigative authorities, we tend to defer to those investigative authorities.” Palestinians and human rights activists, however, say the Israeli military has for years evaded efforts to hold its members accountable.

Biden’s allies argue that his relationship with Middle Eastern leaders accused of human rights abuses is much cooler than that of his predecessor. Trump traveled to Saudi Arabia in his inaugural foreign visit and once referred to Egyptian President Abdel Fatah al-Sissi as his “favorite dictator.” Biden, in contrast, waited about four months after taking office to speak by phone with Sissi and, until last week, had declined to meet with the Saudi crown prince.

For more than a year, U.S. officials sought to circumvent a meeting by noting that Mohammed, despite being the kingdom’s de facto ruler, formally serves as defense minister — so his counterpart is Defense Secretary Lloyd Austin, not Biden. Saudi Arabia’s titular ruler is King Salman, though he is 86 and has health problems.

In addition, the Biden administration has declared it would stop the sale of offensive weapons that the Saudis are using in a brutal war in Yemen. It also cited rights violations in withholding a portion of the $1.3 billion in military aid the United States provides Egypt each year.

But activists say those steps fall short of what is needed to end repressive tactics in Egypt, Saudi Arabia and other autocratic states. They also criticize what they say is a weak response to Israel’s treatment of Palestinians, including its handling of the shooting death of Abu Akleh.

“The contrast between Shireen Abu Akleh and the journalist in Ukraine … has been noticed in places like Palestine,” said Rajan Menon, director of the Grand Strategy Program at Defense Priorities, a think tank. “Our use of the rules and norms is highly selective.”

Before Biden’s trip to Israel and the West Bank, Abu Akleh’s family had complained of neglect by the administration while saying the State Department’s findings appeared designed to protect Israel.

As Biden left the region, his departure left no clear path regarding accountability in the death of either journalist.

No new information emerged after his trip, for instance, about the location of Khashoggi’s remains, which have never been found, even though the men who concealed them after dismembering his body are in Saudi custody. In Abu Akleh’s case, the U.S. finding that she was killed by accident, likely by an Israeli soldier, remains forcefully disputed by the Palestinians.

Human rights advocates said Biden’s approach could pave the way for future tragedies. The Committee to Protect Journalists said Biden’s “failure to hold [Mohammed] to account suggests states can get away with sanctioning such killings and has profound implications for press freedom everywhere.”

Sherif Mansour, the committee’s Middle East and North Africa program coordinator, said Biden’s visit had linked the cases of Abu Akleh and Khashoggi, since in both cases he offered “vague statements” rather than full-throated advocacy. “It’s in the places where press freedom is lacking or nonexistent that it matters what the U.S. said,” Mansour said.

In the room where Biden spoke in Bethlehem, Palestinian journalists wore black T-shirts with Abu Akleh’s face on them. The journalist’s picture was propped on a chair, for a news conference she would have attended, her niece Lina Abu Akleh said.

“There was no way for the president to escape that scene,” Abu Akleh said. “She will always be remembered. And more importantly, we will not be silenced.”

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