China Buying More Copper than Dollars?

China's State Reserves Bureau has been buying excessive amounts of copper in recent months. People interviewed for this article, including a banker and an importer and exporter say that the Chinese are buying more copper instead of purchasing more US Treasury bonds. There is a belief that the Chinese find copper and perhaps other raw materials as a better investment than in treasuries (and a way to keep the Yuan, the Chinese currency weak). China's Central Bank Governor, Zhou Xiaochuan recently called for the creation a new currency system that is based on commodities and not on paper money, specifically the Dollar. The Chinese are concerned that their dollar denominated assets are going to fall in value due to the US' economic plans, which will ultimately make the US dollar very weak in the years ahead. Copper could be a place to start help bring about this system.

As an observer of China I would not be surprised if China is buying more copper for investment purposes. They are very worried about their Dollar assets. At the same time the State Reserves Bureau job is to buy raw materials not dollar denominated assets. The Chinese Metals industry has been sliding and they have vowed to prop it up- ChinaMining