There’s something in the air. The noise over the “safety” of U.S. Treasuries is growing again:

China’s Premier Wen ‘Worried’ on Safety of Treasuries
China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said.

“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

. . .

“Of course we are concerned about the safety of our assets,” Wen said after the annual meeting of the legislature. “To be honest, I am a little bit worried.”

. . .

China should seek to “fend off risks” as it diversifies its $1.95 trillion in foreign-exchange reserves, Wen said. Yu Yongding, a former adviser to the central bank, said in an interview on Feb. 10 that the nation should seek guarantees that its Treasury holdings won’t be eroded by “reckless policies.”

But wait, why does China own so many Treasuries? Many factors have contributed to this imbalance but perhaps this story is a sentiment indicator that we are at the cusp of a huge inflection point:

• The bad news on US Trade
  What’s more, with the majority of the remaining structural deficit now lying with just China alone, the balancing act that is the Chinese-US trade relationship could see some very interesting new developments. For one — in light of Beijing’s growing concern over its US investments – Setser speculates whether we could see China buying more US imports instead of bonds.
• China’s stimulus: Got a light?
  China has not only accomplished considerable fiscal and monetary easing. By allowing the yuan to rise by 18% in trade-weighted terms over the past 12 months, Beijing is passing on some of that boost to the rest of the world.