China to Invest Less in U.S. Securities

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China is changing its international investment strategy. For the first time, the People's Republic is putting more money into hard assets like iron, oil and copper and less into U.S. government securities.

Barron's Magazine reports China is making the switch because it needs those hard assets for its industrial economy, which is growing rapidly. But it's also a way to move out of the dollar, which has been losing value for years on the international markets.

Hard assets, on the other hand, are more likely to keep or even increase their value.

Two of China's largest financial institutions will participate in the initial public stock offering by General Motors this week - the Industrial and Commercial Bank of China, one of China's four big central government banks, and the China International Capital Corp., a joint venture run primarily by Central Huijin Investment Ltd. and Morgan Stanley.

This is the first time Chinese government banks have participated in a major U.S.-issued IPO, according to IPO tracking firm Dealogic. The banks are listed as co-managers in the offering, meaning they will sell a portion of the new shares.

The U.S. has also called on China to let the yuan rise before President Hu Jintao's trip to Washington in January, setting a deadline for results after Group of 20 leaders failed to reach a broad agreement on currencies.

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