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China Adds Japanese Debt Holding, Remaining Japan’s Largest Foreign Holder

05-28 15:19 Caijing
Analysts believe it’s one of Chinese government’s efforts to diverse its foreign reserves which have been invested heavily in the U.S. dollar.

China raised its Japanese debt holdings by 14% from a year earlier to 20 trillion yen at the end of 2012, remaining the largest foreign holder of Japan, Bank of Japan statistics showed Tuesday.

The US reduced its holdings of Japanese debt by 15% to 8.6 trillion yen from 10 trillion, while UK cut its holdings by 23% to 8.9 trillion yen.

China increased its holdings of Japanese debt at a time when the yield of Japan’s 10-year treasury hit a nine-year low since July, 2003 as global investors fled to Japanese and U.S. treasuries as safe havens amid worries over the lingering European crisis. 

Beijing hiked its holdings of Japanese debt to 18trillion yen (1.46trillion yuan) at the end of 2011, a whopping 71% rise compared with a year ago and surpassed the U.S. and UK to become the largest foreign holder of Japanese debt in 2010.

Analysts believe it’s one of Chinese government’s efforts to diverse its foreign reserves which have been invested heavily in the U.S. dollar.

China which reduced its holdings of the U.S. debt in March still leads the list of the biggest U.S. creditors with $1.25trillion worth of treasuries, according to data released by the U.S. Department of Treasury.

Safety remains to be the top priority for China’s foreign reserve regulators in 2012, said the State Administration of Foreign Exchange (SAFE).

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