China's Diversification Won't Hurt Dollar, Wen Says (Update1) By Christina Soon and Yanping Li http://www.bloomberg.com/apps/news?pid=20601087&sid=aV5vnes3kRso&refer=home March 16 (Bloomberg) -- China's Prime Minister Wen Jiabao said the setting up of a new state organization to diversify investment of the nation's $1.07 trillion currency reserves won't hurt the value of U.S. securities. ``Our purchases of U.S. dollar assets are mutually beneficial and the setting up of the new agency won't affect the value of the U.S. dollar assets,'' Wen said at a televised press conference during the annual meeting of the Chinese legislature in Beijing. China, the second-largest holder of U.S. government bonds, lifted its holdings of Treasuries by $4 billion to $353.6 billion in January as a record trade surplus swells foreign exchange reserves. A lack of experienced fund managers and a slump in global emerging market debt may delay any shift from the safety of U.S. debt. ``Holding Treasuries, one of the most liquid assets, is the better option, especially given that the current environment is very volatile,'' Steven Chang, global markets vice president at State Street Bank & Trust Co., a unit of the world's biggest provider of investment services to institutions, said before the press conference. ``I'm not sure why they should be unwinding that much that quickly.'' The government plans to set up an agency to manage its reserves that will seek higher returns and invest in companies in a similar way to Singapore's Temasek Holdings Pte., Finance Minister Jin Renqing said on March 9. ``China's overseas investment experience is fairly short,'' Wen said today. ``China's outbound investment is tiny as compared to developed countries.''