The Chinese appetite for U.S. debt seems to be abating. After increasing their holdings in U.S. debt by more than 50% in 2008, China scaled back their exposure by 3% in June, the largest amount in 9 years:
http://news.bbc.co.uk/2/hi/business/8207174.stm
I'm not reading a lot into this, because it is most likely just diversification. However, it's important to note that the Chinese are going to take a big hit when the chickens of U.S. inflation come home to roost, and they're not happy about it.
Their increasingly vocal demands for a new reserve currency, combined with similar demands being made around the world, may signal the swan song for the U.S. dollar. Whether or not that's true, the dollar is taking a royal pounding and oil hit a 2009 high today.
Although some have suggested SDR's play a bigger role as a reserve currency, I think that the more likely solution will be for people to move assets to an already established currency whose central banker has a steady hand, i.e.: the Euro.
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