Beijing's US Treasury bonds reach US$682b
The mainland's holdings of United States Treasury bonds grew US$29 billion to US$681.9 billion at the end of November last year, the fifth consecutive month that the nation amassed more US-issued debt.
In September last year, the mainland overtook Japan to become the biggest holder of Treasury bonds, according to US Department of the Treasury data.
However, traders said that the increased bond holdings may not mean Beijing actually bought US$29 billion of treasuries in the market since long-term US Treasury bonds had appreciated an average 10 per cent in November.
Considering that gain and Beijing's holdings of US$652.9 billion at the end of October, the figure could have been higher. Instead, Beijing may have sold an unknown amount of bonds in November to arrive at a lower net increase, traders said.
The mainland holds the US treasuries in multiple accounts, some of which are non-tradable, making it difficult to decipher actual trading behaviour.
Japan ranked second, holding US$577.1 billion, down US$4.9 billion from a month earlier. Britain ranked third with US$360 billion, against US$357.2 billion previously.
Since July last year when the credit crunch began, sparked by the US subprime mortgage crisis, the mainland's holdings of US Treasury bonds has risen to the surprise of many.
Market observers have interpreted this as a move by Beijing to guard the value of the US dollar to prevent its huge foreign exchange reserves from evaporating in the crisis.
By the end of last year, China's foreign exchange reserves stood at US$1.95 trillion. This is expected to fall with a decreasing trade surplus, less foreign direct investment and increased capital outflows as China's economy slows from double-digit growth in the four years to 2007.
On the rise
November growth in the mainland's stock of US-issued debt, in US$: $29b
