By the end of September, China held US $585 billion of U.S. government debt and replaced Japan to become the largest holder of US government debt, according to the latest Treasury International Capital (TIC) report released by the US Department of Treasury.
In September, China increased its holding of U.S. government debt by US $43.6 billion, nearly doubling the amount from the previous month of US $22.3 billion to record the biggest monthly increase this year. From January to September, the net increase totaled US $107.4 billion.
Japan, which had always taken first place in terms of the volume of U.S. government debt it held, reduced its holding for two consecutive months. Its holding fell from US $586 billion in August to US $573.2 billion in September, down by US $12.8 billion. The UK is the third-largest holder possessing US $338.4 billion.
Zhang Ming from the international finance research section of the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, said China continues to increase its holding of U.S. government debt because the US short-term government debt is again favored by international investors and the US dollar is markedly appreciating against other major currencies.
Analysts pointed out that it is still too early to draw any conclusions as to whether the US dollar can maintain its strong position. For China, which holds a large volume of U.S. government debt and growing foreign exchange reserves, the important issue is to adjust its assets structure.
By People's Daily Online
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