China continues to add US Treasury Bonds to its $2 trillion foreign reserve portfolio, since worthy alternative assets in the turbulent world financial market and slumping economy are hard to find. But its new holdings consist more of shorter-term bonds.
According to US Treasury International Capital reporting system figures, China’s holding of the US national debt at the end of October grew by $65.9 billion over September, the largest monthly growth this year, to $652.9 billion. After overtaking Japan in September, China maintains its status as America’s largest creditor. Japan also increased its holding of US national debt by $12.3 billion to $585.5 billion.
In October net international capital flow into the US totaled $286.3 billion. Among the total, net holdings of foreign residents was $274.5 billion and net holdings of foreign official institutions totaled $11.9 billion.
Foreigners are increasing their holdings of short-term bonds and cutting long-term bonds. Figures for October show, after the structural adjustment, net selling of long-term bonds by foreign investors reached $13.3 billion. Meanwhile, foreign investors have picked up $147.4 billion in short-term bonds.
China, Japan, and UK are still the three biggest creditors of the US, with the UK holding $360.2 billion at the end of October. The total holdings of these three countries accounts for 52.5% of the overall total.