CHINA should make better use of the country’s funds by looking to invest its large capital reserves in real assets, not U.S. Treasury bonds, an adviser to China’s central bank said yesterday.

“Rather than investing in U.S. government debt, it’s better to invest in some real assets,” said Fan Gang, director of the National Economic Research Institute and a member of the People’s Bank of China’s Monetary Policy Committee.

Fan, speaking at the Boao Forum for Asia in Hainan Province, also said that China’s debt load was a serious problem but that it would not lead to a financial crisis for the country as the debt was mostly domestic and China had ample savings.

He said that the debt overhang was a result of previous overheating of the economy. “This problem is serious and we need to contain this financial risk, but it will not cause a financial crisis,” he said.

Fan said China’s savings rate is 44 percent of GDP, giving it enough of a cushion to deal with the risks, though he added that it would take time for China to stabilize the leverage ratio.

In an interview Sunday, Fan addressed China’s rising trade tensions with the United States, saying the United States feels pressure from China’s rise.

Fan said the United States will take measures, which could include a trade war or blocking Chinese investment in the country, to contain China’s development.

On Sunday, Zhang Yuyan, a government researcher, told the Boao Forum that China was unlikely to sell off its holdings of U.S. Treasury bonds on a large scale as a tactic in its trade dispute with the United States.

“On whether China will reduce its foreign exchange reserves, I don’t know how policymakers think. I personally believe this possibility is very small,” Zhang said.(SD-Agencies)