Amid Slowing U.S. Debt Demand, China Raises Holdings

China, as the biggest investor in the United States, is being closely watched for shifts in its demand for U.S. debt.

Foreign demand for U.S. securities weakened in May as the country hit its borrowing limit, but China increased its holdings for the second month in a row, the Treasury said on July 18.

Net foreign buying of U.S. long-term securities in May -- incoming foreign investment less outgoing U.S. investment in foreign debt -- fell by 23% from April to $23.6 billion.

The weaker demand for debt came as the U.S. government hit its legal borrowing limit of $14.3 trillion on May 16.

China, as the biggest investor in the United States, is being closely watched for shifts in its demand for U.S. debt.

For the second month in a row, China increased its Treasury holdings, to $1.16 trillion in May from $1.15 trillion in April.

Japan and Britain, the second- and third-largest foreign buyers of U.S. debt, also raised their holdings, the data showed.

Japan's investment of $912.4 billion was up by $5.5 billion from April.

Britain increased its holding by $13.5 billion, to $346.5 billion.

Copyright Agence France-Presse, 2011

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