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China trims US bond holdings
Published on: 2010-01-20
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WASHINGTON — China reduced its holdings of US Treasury bonds in November amid an unexpectedly strong surge in overall foreign purchases, official data has shown.

China, the largest holder of US Treasury bonds, lowered its holdings of Treasury securities to 789.6 billion dollars by November 30 from 798.9 billion in October, the Treasury reported.

Overall, net foreign purchases of long-term securities, which largely are Treasury bonds but also include other assets such as corporate bonds and equities, leapt to 126.8 billion dollars in the month.

That was a sharp jump from the downwardly revised 19.3 billion dollars in October.

Net foreign purchases of long-term US securities tripled to 129.3 billion dollars. Net buying by private foreign investors was 96.0 billion dollars, while those by foreign official institutions were 33.3 billion.

"The November figure represented a tripling in the pace of foreign buying compared to the slow pace in the past several months," said Ed Friedman of Moody's Economy.com.

US residents, by contrast, sharply reduced their investments, purchasing a net 2.5 billion dollars of long-term foreign securities, about a tenth of what they had bought in October, the Treasury reported.

Net capital flows swung into positive territory in November, reaching 26.6 billion dollars, after negative flows of 13.9 billion in October.

The increase was led by a surge in private net foreign private flows of 26.8 billion dollars that eclipsed net foreign official flows of negative 0.3 billion dollars.

Foreign holdings of dollar-denominated short-term US securities fell by 27.2 billion dollars. Foreign holdings of Treasury bills decreased by 18.9 billion.

Japan, the second-largest holder of the US investments, increased its holdings to 757.3 billion dollars from 745.9 billion.

Britain, the third-largest holder of US bonds, raised its holdings to 277.5 billion dollars from 230.7 billion.

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