Data: China now holds less US debt, sign of changes in Beijing's foreign reserves management
Japan has deposed China as the top foreign holder of U.S. Treasuries.
Data released by the Treasury Department has shown that Japan
owned $1.2244 trillion worth of U.S. government securities at the end
of February, compared to $1.2237 trillion for China. However, transactions carried
out by other nations on behalf of China and Japan were not included.
During the month of January both countries unloaded US debt, but China sold more, making Japan the top U.S. creditor for the first time since the financial crisis.
However the China-Japan switch marks the bigger tendency and first of all, the way Beijing manages its foreign reserves. Over the past year, China's U.S. debt holdings dropped by $49.2 billion, while Japan's increased by $13.6 billion, the data showed.
Purchasing Treasuries has been the way for China to keep renminbi pegged to the US dollar, helping lower the value of the local currency and making China's exports more competitive in foreign markets.
But recently, partly due to U.S. pressure and partly as an effort to ward off its own inflation, the yuan was allowed to rise in value.
In the US, however, there's another major buyer of U.S. debt, which is the central bank. At last count the Federal Reserve owned around $2.5 trillion worth of Treasuries, up from around $800 billion at the end of 2007.
