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Jing Ulrich, JPMorgan: China's US Treasury Holdings Register Largest Monthly Decline Since 2000

  • Published 23 Feb 2010

According to the latest Treasury International Capital (TIC) data, China was a net seller of US Treasuries in December, cutting its holdings by $34.2bn (4.3%) to $755.4bn. China's share of total outstanding short and long-term US Treasury securities among foreign holders declined to 20.9% in December, from 23% at mid-2009. With China's total holdings retreating to the lowest level since February 2009, Japan has regained the mantle as the largest foreign investor in US Treasury securities, with $768.8 billion in US sovereign debt in December or 21.3% of total foreign holdings of US Treasury securities.

Over the course of 2009, China added just $28bn to its US Treasury holdings, compared to US$249.8bn in 2008 and $80.7bn in 2007. Since July 2009, the value of China's US sovereign debt has either decreased or shown little change from month to month, suggesting that vocal concerns about the security of China's USD-denominated investments have been followed with a subtle shift in how the country is investing its foreign reserves. During 2009, China also questioned the sustainability of US deficit spending and proposed a new international reserve currency to replace the dollar.

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