China adds $17.7 billion Treasury debts: US data

08:24, May 18, 2010

In the midst of worsening European debt problems, China raised its holdings of U.S. government bonds for the first time in six months, the U.S. Treasury Department data said.

China, the biggest holder of US sovereign debt, increased its long-term Treasury holdings to US$895.2 billion, up US$17.7 billion from February, the Treasury Department said in its latest monthly report on global capital flows.

The last time China hiked its bond holdings was September 2009.

Net foreign purchases of US long-term securities leaped to a record US$140.5 billion in March from US$47.1 billion in February, the Treasury data showed, amid mounting concerns about the Greek debt crisis.

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

"This not only is a strong vote of confidence in the US 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."

Japan, the world's second-largest economy and the number-two holder of Treasuries, increased its holding to US$784.9 billion from US$768.5 billion.

News of the record amount of demand for US dollar-denominated assets in March came as the euro sank to a four-year low against the dollar on Monday amid concerns about sovereign debt problems in Europe.

Michael Woolfolk at Bank of New York Mellon said the TIC data bode well for the budding US recovery from the worst recession in decades.

"These are positive developments for the funding of the US trade deficit and support for the dollar," he said.

By People's Daily Online