Latest News:  

English>>Business

Why has China increased US debt holdings for two straight months?

(People's Daily Online)

15:24, January 21, 2013

Key Words: US debt; U.S. Treasury securities; US government debt; creditors

Related Reading:
>> Measured action needed to address US debt issue
>> US' flooding dollars must not be condoned: scholar
>> US public is paying the price

China increased its holdings of U.S. Treasury securities by 200 million U.S. dollars last November. The country held nearly 1.2 trillion U.S. dollars' worth of Treasury securities by the end of last November, and remained the largest single foreign holder of U.S. government debt, according to a Treasury International Capital report released by the U.S. Treasury Department on Jan. 16. China also increased U.S. debt holdings by 16.3 billion U.S. dollars last October, revised data revealed.

Experts said that increases or cuts in China's U.S. debt holdings are normal market behavior, and should not be interpreted politically.

Market demand for U.S. government debt rebounds

Despite the drop in U.S. Treasury yields, most foreign creditors increased their holdings of U.S. government debt last November. According to data from the Department of the Treasury, foreign holdings of Treasury securities rebounded last November, during which foreign governments and private investors bought a net total of 26.4 billion U.S. dollars' worth of Treasury securities, hitting a three-month high. Net foreign holdings of long-term Treasury bonds increased 52.3 billion U.S. dollars last November, after decreasing 1 billion U.S. dollars last October

China and Japan are the largest and second largest foreign holders of U.S. government debt. The U.S. debt held by the United Kingdom and Caribbean countries increased the most last November.

China mainly increased holdings of Fannie Mae and Freddie Mac bonds. Data revealed it increased net holdings of long-term Treasury bonds by 894 million U.S. dollars last November.

A breakdown of the holdings showed that it reduced holdings of long-term Treasury bonds by 902 million U.S. dollars, increased Fannie Mae and Freddie Mac bonds by nearly 1.1 billion U.S. dollars, increased holdings of corporate bonds by over 1.2 billion U.S. dollars, and reduced holdings of corporate stocks by 520 million U.S. dollars.

Analysts attributed the rebound in foreign demand for U.S. government debt to the risk avoidance awareness raised by the global economic slowdown and the U.S. policy of quantitative easing.

Gennadiy Goldberg, an economist at TD Securities in New York, noted that the Federal Reserve announced in September that it would buy 40 billion U.S. dollars in mortgage securities each month, which temporarily reduced foreign demand for U.S. government debt. Most foreign investors then turned their eyes to mortgage securities.

【1】 【2】


Read the Chinese version: 中国为何连续两月增持美债(热点聚焦)
Source: People's Daily Overseas Edition; Author: Luo Lan


We recommend:

Online turnover surpasses 1 trillion yuan in 2012

Jack Ma to step down as Alibaba CEO

FDI sees 1st decrease in 9 years amid slowdown

China helps drive Rolls to record year

Top Ten Economic Events in 2012

CIC seeks balanced portfolio

Email|Print|Comments(Editor:梁军、厉振羽)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. WZ-8 armed helicopters in training

  2. UN's equipment verification

  3. Mumbai in lens

  4. Lanterns fly from low to high

  5. Photos: Chinese Style in 2012

  6. They made 2012 warm and beautiful

  7. Characters of 'Journey to the West'

  8. Chinese animation films getting stronger

  9. Most transparent multinationals

  10. Cute animals enjoy thier toys

Most Popular

Opinions

  1. What election means to Israel
  2. Beijing economy expected to grow
  3. London's Great Smog has lessons for Beijing
  4. Top 10 news items for Chinese firms in 2012
  5. Inflation rise 'on the horizon'
  6. Software gives travelers advantage
  7. Will Rahul Gandhi secure a 3rd term in power
  8. U.S. sends wrong signal over Diaoyu Islands issue
  9. Labor shortage hits cities as holiday nears
  10. Reaching out to sympathetic Japanese

What’s happening in China

Sanitation worker, environmental protector in city

  1. Beijing population tops 20.69 mln
  2. Evidence may clear inmates jailed 16 years
  3. 'One day, wolves may attack humans'
  4. Drivers buy license plate before the car
  5. Workers assured of wages ahead of festival