According to the data posted on the web site of the US Department of Treasury, China holds US$763.5 billion in US Treasury bonds by end of April, down by US$4.4 billion from previous month's US$767.9 billion. This was the first time that China had decreased its US Treasury bond holdings this year.
China has constantly bought US Treasury bonds over the years. The US Treasury data shows that from May 2008 to now, China has purchased about US$260 billion US Treasury bonds. With the bond holdings going up, China has seen debate rage over this matter. Some say that considering the possibility of US dollar's further depreciation, China should be cautious in buying US Treasury bonds whereas others still believe that it is the choice investment with foreign exchange reserves to purchase the bonds from the US.
In March, Hu Xiaolian, Administrator of the State Administration of Foreign Exchange (SAFE) said that US Treasury bonds play a very important part in China's investment with foreign exchange reserves. China would continue buying the bonds based on its needs while keeping an eye on the fluctuation of property values, she added.
In fact, China was not the only country that trimmed its US Treasury bond holdings in April. Japan, Russia, and Brazil, among many other countries and regions took the same action. Among the top five US Treasury holders, only Britain bought US$24.6 billion US bonds in April. But China still stays as the biggest US Treasury bond holder.
In addition, sources with SAFE revealed that China is looking to spend a maximum US$50 billion on the bonds issued by the International Monetary Fund (IMF) if reasonable returns could not cause an issue. Russia and Brazil are also eyeing the upcoming IMF bonds. Both of them are planning to get foreign exchanges by selling US Treasury bonds and use them to purchase IMF bonds.
(China.org.cn by Pang Li June 16, 2009)