Japan overtakes China as top holder of US Treasury Debt

BEIJING - The US Treasury Department’s latest monthly report on its bond holdings reveals that Japan has overtaken China as the top foreign holder of US Treasury securities, a position it last held in August 2008. According to the report, the holdings of China (typically the #1 holder of Treasury debt), decreased by 1.2% to US$1.22 trillion from January, while Japan’s only fell 1.1%.

China’s larger decline of holdings allowed Japan to bump back up to the top spot, US$700 million above China. This comes as little surprise to many private analysts, who have been forecasting Japan’s surpassing China’s holdings of Treasury debt given current economic trends in both nations.

The slowing of China’s economy, in addition to its desire to diversify overseas investments, has given the country less to invest in US government bonds. Meanwhile, the Japanese central bank has been aggressively pushing to boost the country’s money supply in an effort to combat low levels of inflation.

Economists see these trends continuing, with Japan’s holdings of Treasury debt USD 13.6 billion higher than a year prior, while China’s holdings down by USD 49.2 billion from a year before. www.webershandwick.cn (ATI).