Sharp decline in China’s exposure to the U.S. bonds

China’s exposure to bonds of the United States fell sharply in the fourth quarter of 2011, according to data released Wednesday by the U.S. Treasury Department.

These figures indicate that on December 31, Chinese investors (including Hong Kong), the first foreign holders of U.S. government debt, had the U.S. government bonds with a value of 1273.6 billion, or 7.8% less than the end of September.

The Treasury does not explain this decrease.

This may reflect a definite withdrawal of Chinese to the U.S. Treasury securities, or less intervention by the Beijing authorities on the foreign exchange market (when Chinese government decide to counter the rise of its currency against the dollar, the Chinese central bank purchases U.S. bonds).

The figures are the preliminary results of an annual survey conducted by the Treasury Department to identify the major foreign holders of U.S. government debt.

Compared to the latest monthly figures that the Treasury had published on February 15, it shows that the portfolio of U.S. government bonds held by Chinese has been revised in December, up 5%, but its decline compared to end September was greater than expected so far.

New data from the U.S. government also shows a ranking change of the largest Treasury bonds holders of the United States after China.

Japanese remain in second place, with a portfolio of 1058.2 billion, Great Britain, who was third, fell to eleventh place, with a portfolio valued at $ 112.4 billion, knowing that the third and the fourth is occupied by two groups of countries, the “oil exporters”, and “Caribbean banking centers”.

Revision (down 73%) of the UK portfolio is related to the role of international financial hub of London: the previous data had treated all purchases of U.S. securities passing through the City as British purchases, regardless of the payer while the new figures reflect the nationality of the treasury bills holders.

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