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China denies talks on dumping Fannie, Freddie bonds

02 February 2010 21:02 (UTC +04:00)

Baku. Ziya Agazade â€“ APA. China never discussed with any country a plan to dump U.S. Fannie Mae and Freddie Mac bonds, a Foreign Ministry spokesman said on Tuesday, APA reports citing â€œRia Novostiâ€.

The remarks came in response to claims made by former U.S. Treasury Secretary Hank Paulson in his memoirs that Russia pushed China to dump Fannie Mae and Freddie Mac bonds in 2008 in a bid to destabilize the U.S. financial system, but that China declined to play along.

Ma Zhaoxu said China "never discussed the issue of dumping the bonds of the two mortgage agencies [in question]."

He stressed that during the global financial crisis "China always held a responsible position, doing all it could to maintain the stability of global financial markets."
"That much is obvious to any state in the world," he said.

Russia also denied on Monday that it had approached China to sell off U.S. Fannie Mae and Freddie Mac bonds.

"Russia at that time was a country that invested huge funds in these organizations and was not interested in rocking these institutions," Dmitry Peskov, press secretary for the Russian prime minister, said.

Paulson says in his memoir he learned of the "disruptive scheme" while attending the Beijing Summer Olympics.

Russia sold all of its Fannie/Freddie debt in 2008, after holding $65 billion of the notes at the start of that year, according to central bank data.