BEIJING — China’s official foreign exchange manager is still buying record amounts of US government bonds, despite Beijing’s increasingly vocal fear of a dollar collapse, according to officials and analysts. In recent months, senior Chinese officials, including Premier Wen Jiabao, have repeatedly signalled their concern that US policies could lead to a collapse in the dollar and global inflation. But Chinese and western officials in Beijing say China is caught in a ‘dollar trap’ and has little choice but to keep pouring the bulk of its growing reserves into the US Treasury, which remains the only market big enough and liquid enough to support its huge purchases. In March alone, China’s direct holdings of US Treasury securities rose by $23.7bn (£14.9bn) to reach a new record high of $768bn, according to preliminary US data, allowing China to retain its title as the biggest creditor of the US government. ‘Because of the sheer size of its reserves Safe [China’s State Administration of Foreign Exchange] will immediately disrupt any other market it tries to shift into in a big way and could also collapse the value of its existing reserves if it sold too many dollars,’ said a […]