China cuts back US Treasury bond holdings

WASHINGTON (AFP) - China cut back its Treasury bond holdings in January but remained the top owner of US government debt, the Treasury Department said Monday.
China held 889.0 billion dollars in Treasury securities at the end of January compared with 894.8 billion dollars in December, the departments latest figures on international capital flows showed.
Japan was far behind on the number two spot with 765.4 billion dollars in Treasury bonds, little changed from its December figure of 765.7 billion dollars, the data showed.
The Treasury Department created a stir last month when it announced China had slashed its bond holdings to 755.4 billion dollars in December the biggest drop since August 2000, allowing Japan to become the top holder of American government debt.
But two days later, the department produced sharply revised data indicating that while China had cut back on its bond holdings, the level was still well above that of Japan.
The revision came when the department looked at Chinese holdings in US Treasuries held in third markets such as Britain and Hong Kong, which were not picked up by the earlier estimates.
Some US experts had told a Congressional forum last month that China appeared to be secretly buying bonds via third locations to hide its importance as a major creditor to Washington, experts told a congressional forum Thursday.
They said China-linked entities may be scooping up US bonds in London, Hong Kong or other locations, pointing out that official data almost certainly understates Beijings US government debt holdings.
Some say the massive holdings by China have implications for US national security, making it harder for Washington to carry out policies in conflict with Beijing.