China Boosts U.S. Bond Holdings for First Time in Six Months

May 17, 2010
Raised its holdings to $895.2 billion, up $17.7 billion from February

As foreign buying of long-term U.S. assets set a new record high, China increased its massive Treasury bond holdings in March for the first time in six months.

The Chinese government, the top holder of U.S. government debt, raised its holdings to $895.2 billion, up $17.7 billion from February, the Treasury Department said in its latest monthly report on global capital flows.

The last time China increased its bond holdings was in September 2009.

China had cut its massive U.S. Treasury bond holdings to the lowest level in at least nine months in February as Beijing resisted persistent U.S. pressure to revalue its currency.

Net foreign purchases of U.S. long-term securities leaped to a record $140.5 billion in March, almost tripling from the previous month, the Treasury data showed, amid escalating concerns about the Greek sovereign debt crisis.

"Motivated by safe-haven concerns and worries about the Greek debt crisis, private foreign investors increased their purchases of U.S. Treasury bonds and notes, government agency bonds, and even private corporate bonds," said Tu Packard, a senior economist at Moody's

"This not only is a strong vote of confidence in the U.S. economy, but also speaks volumes about the extent of investor unease with policy management of the European sovereign debt crisis and the implications for the world economy."

Beijing remained the top holder of U.S. government debt in March, followed by Japan, which increased its holding to $784.9 billion from $768.5 billion.

Britain, the third-biggest holder, was a net buyer, bumping up its holding to $784.9 billion from $768.5 billion in February.

Copyright Agence France-Presse, 2010

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