China starts diversifying forex reserves

[cornilouse]

What is interesting apart from the obvious, is that the Article claims the U.K are the 3rd largest owner of USA debt

http://www.chinadaily.com.cn/china/2...t_11167785.htm

BEIJING - China has diversified its huge pool of foreign reserves by cutting US Treasury bond holdings and increasing Japanese debt holdings.

The nation reduced US treasury bond exposure by nearly $24 billion in June, down 2.7 percent from May, according to US government data.

During May, China's holdings of US debt dropped $32.5 billion after hitting a yearly high of $900.2 billion in April.

According to data released by the US Treasury Department on Monday, by the end of June, China held nearly $843.7 billion worth of US debt, $94.6 billion less than the peak of $938.3 billion it held in September 2009. Despite the cuts, China is still the largest US debt holder, followed by Japan and the United Kingdom.

As the nation trimmed its US exposure, it has been expanding its Japanese debt buys. According to data, China has purchased $20 billion worth of Japanese treasury debt for six consecutive months, almost five times the total new increases of its holdings during the past five years.

During the first half of 2010, China bought 1.73 trillion yen ($20 billion) worth of Japanese debt, nearly seven times the full-year record of 253.8 billion yen in 2005, according to Japan's finance ministry.

Analysts said the moves reflect the clear intention of the nation to further diversify investment of its $2.45 trillion foreign reserves. The possibility of buying more debt from other Asian countries and those who conduct renminbi cross-border settlements with China are also increasing, they said.

Chen Daofu, an economist with the Development Research Center of the State Council, said China would continue to adjust its holdings of US debt, but it is hard to predict whether it would continue to reduce the holdings in the coming months.

"It all depends on how the economic situation in the US unfolds and how other nations recover," he said.

Chen said although European and emerging market debt buys are options for China, they cannot match the strength of US debt in foreign reserves over the short term.

"Actually, the decision makers know that the yields from US debt are questionable, but it's hard to find any other investment channel that is good enough."

Zhang Monan, a researcher with the State Information Center, said the nation's choice of debt to park its foreign reserves is something between "bad and worse".

"Economic development driven by debt in these nations are not sustainable and risks brought by the unstable world economy have been increasing," she said.

Zhang said the government should invest in the real economy overseas, instead of treasury debt, especially in strategic or emerging industries like energy and high technology.

US government data also showed that Japan continued to be the second largest foreign holder of US debt, followed by the UK.

Japan held $803.6 billion worth of treasury bonds in June, higher than the $786.7 billion in May, while Britain held $362.2 billion in US bonds, up from $350 billion, according to the US data.

That means we have been buying more American debt, when the government have told us that they are cutting dodgy investments

[funkslug]

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
(in billions of dollars)
HOLDINGS 1/ AT END OF PERIOD


Jun May Apr Mar Feb Jan Dec Nov Oct Sep Aug Jul Jun
Country 2010 2010 2010 2010 2010 2010 2009 2009 2009 2009 2009 2009 2009
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------

China, Mainland 843.7 867.7 900.2 895.2 877.5 889.0 894.8 929.0 938.3 938.3 936.5 939.9 915.8
Japan 803.6 786.7 795.5 784.9 768.5 765.4 765.7 754.3 742.9 747.9 727.5 720.9 708.2
United Kingdom 2/ 362.2 350.0 321.2 279.0 233.5 208.3 180.3 155.5 108.1 126.8 104.3 97.1 90.8
Oil Exporters 3/ 223.0 235.1 239.3 229.5 218.8 218.4 207.4 208.3 209.0 205.9 209.8 209.9 211.8
Carib Bnkng Ctrs 4/ 165.2 165.5 153.4 148.4 144.6 143.8 128.5 123.5 114.4 116.9 125.3 138.8 135.5
Brazil 158.4 161.4 164.3 164.4 170.8 169.1 169.3 165.8 164.9 153.6 146.0 146.8 148.5
Hong Kong 141.0 145.7 151.8 150.9 152.4 146.6 148.7 142.1 137.8 128.0 120.5 111.1 95.7
Taiwan 128.6 126.2 126.9 124.8 121.4 119.6 116.5 115.4 115.6 115.1 112.9 114.4 114.0
Russia 123.4 126.8 113.1 120.1 120.2 124.2 141.8 151.4 145.9 145.1 144.9 141.3 143.3
Switzerland 100.1 84.4 80.0 78.8 81.8 84.4 89.7 89.6 85.3 82.7 82.0 81.9 85.7
Luxembourg 97.5 76.3 77.6 84.6 77.9 79.1 88.4 80.2 79.5 87.5 83.0 80.8 92.9
Canada 94.0 85.0 82.1 77.0 67.1 54.7 52.8 50.7 44.8 42.3 30.2 24.1 23.0
Germany 53.5 55.4 54.3 53.7 49.9 49.0 47.8 48.7 47.9 48.8 50.1 51.2 48.9
Singapore 50.5 40.6 42.4 45.5 42.6 41.3 39.2 37.5 36.3 39.4 43.1 43.4 41.9
Thailand 49.3 46.3 46.9 43.5 42.1 33.3 33.3 29.6 28.0 27.9 31.4 29.3 27.5
Ireland 48.3 48.0 45.7 43.3 38.7 39.2 43.6 43.1 42.6 37.0 40.8 42.9 50.6
Korea, South 38.7 37.8 38.7 40.1 39.8 39.7 40.3 40.2 43.3 39.9 39.8 38.7 37.4
India 36.4 29.3 31.0 32.0 31.6 32.7 32.5 34.5 35.8 38.8 41.5 41.8 42.2
France 35.2 36.4 38.8 38.7 32.5 35.9 30.5 40.4 29.1 25.0 28.0 17.5 18.9
Mexico 33.0 34.1 33.1 36.1 33.9 34.4 36.8 31.9 26.5 27.8 33.2 33.4 35.2
Egypt 29.4 28.0 21.1 21.4 21.7 19.4 18.9 19.4 14.3 14.9 14.5 12.7 11.5
Turkey 25.5 27.6 27.9 28.7 27.3 27.5 28.1 29.4 30.3 28.1 28.5 27.1 27.3
Poland 23.2 23.4 24.6 23.4 22.6 22.3 22.9 21.9 21.9 21.5 21.3 20.9 20.5
Italy 20.1 20.8 20.3 20.5 20.9 21.3 21.1 21.6 21.6 20.0 19.3 19.8 19.1
Israel 18.4 20.1 19.9 22.0 18.9 16.8 13.8 15.1 14.5 16.9 16.2 15.5 16.6
Netherlands 17.3 17.6 19.6 19.2 20.4 20.7 20.4 21.0 20.5 22.0 22.0 22.2 19.6
Belgium 17.2 17.6 18.5 17.1 17.0 17.4 17.3 17.4 16.9 17.2 17.7 17.8 17.9
Colombia 17.0 15.7 15.7 16.2 16.0 16.0 17.3 17.2 18.3 18.3 17.9 16.4 13.3
Sweden 16.5 13.4 15.3 16.3 16.0 15.7 15.2 15.5 15.3 14.4 12.7 12.5 12.5
Norway 16.1 15.2 15.0 14.6 13.6 12.3 12.1 8.5 7.3 7.6 7.1 11.3 11.1
Australia 14.5 14.1 17.9 14.4 14.4 15.4 16.3 13.7 12.8 12.3 12.5 12.1 12.5
Philippines 14.3 14.4 15.0 14.6 12.5 11.3 11.7 11.7 11.4 11.4 11.9 10.9 11.2
Denmark 13.0 12.8 9.7 9.6 9.8 8.9 8.5 7.8 7.7 7.1 5.3 5.5 5.3
Chile 12.2 12.0 12.0 11.9 12.3 12.5 12.4 12.1 12.4 12.8 12.9 13.4 14.2
Malaysia 11.1 10.5 10.9 11.0 10.9 11.0 11.7 11.8 11.7 11.7 11.9 12.5 12.4
All Other 158.1 161.7 158.4 153.7 152.2 152.2 155.9 159.2 163.3 164.6 168.5 169.9 168.2
Grand Total 4009.2 3963.6 3957.9 3885.0 3752.3 3708.8 3691.7 3675.0 3576.1 3575.5 3531.1 3505.8 3460.8

Of which:
For. Official 2696.7 2697.2 2721.6 2709.4 2677.1 2681.1 2706.3 2734.3 2714.5 2699.2 2689.8 2675.9 2625.5
Treasury Bills 460.7 473.4 505.0 507.3 503.4 508.5 534.3 586.6 598.0 597.7 607.3 606.6 571.9
T-Bonds & Notes 2235.9 2223.8 2216.6 2202.0 2173.8 2172.6 2172.0 2147.7 2116.5 2101.5 2082.5 2069.3 2053.6

Department of the Treasury/Federal Reserve Board
August 16, 2010

1/ Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes
reported under the Treasury International Capital (TIC) reporting system are based on annual
Surveys of Foreign Holdings of U.S. Securities and on monthly data.
2/ United Kingdom includes Channel Islands and Isle of Man.
3/ Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,
Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
4/ Caribbean Banking Centers include Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama.
Beginning with new series for June 2006, also includes British Virgin Islands.