China’s Holdings of US Treasuries Shrank For the First Time This Year in September


China’s holdings of US Treasuries fell for the first time this year in September, yet the country continues to remain America’s biggest sovereign creditor.

The latest data from the US Treasury International System indicates that in September China’s holdings of US Treasuries fell by USD$19.7 billion to $1.18 trillion, bringing an end to seven successive months of increase.

During the same month America’s second biggest overseas creditor, Japan, also reduced its holdings of US Treasuries by $5.7 billion to approximately $1.096 trillion.

China ousted Japan as America’s biggest sovereign creditor┬ájust a month previously in August.

Despite the recent fall in US Treasury holdings, data from the Chinese central bank indicates that China’s foreign reserves saw an on month increase of USD$16.983 billion to reach $3.10851 trillion in September, remaining above the $3.09153 threshold for the eighth consecutive month.

This buoyancy follows the drop in China’s foreign reserves last year, when Chinese investors embarked upon an overseas buying spree and Beijing found itself compelled to bolster the value of the yuan.

China’s foreign reserves fell for the seventh consecutive month in January 2017, dropping below the USD$3 trillion threshold for the first time since 2011.

With respect to any shifts in its holdings of US Treasuries, Beijing’s official stance has been that the American debt is a key investment market for China, and that any increases or reductions in holdings are simply standard investment operations based on shifts in the market.