Yikes, PRC Still World's Largest Treasury Holder

♠ Posted by Emmanuel in at 3/09/2010 09:35:00 PM
Many commentators like yours truly were all agog about the Treasury International Capital system recording a drop in Chinese holdings of US official debt in December 2009, catapulting Japan back to first place as America's biggest lender. After performing annual revisions to this data, however, the Treasury has bumped up total Chinese holdings a whopping $139.4 billion to a total of $894.8 billion (see foreign Treasury holdings by country here). In general, these annual figures are more reliable than the monthly changes which are more susceptible to head fakes in recorded data. So, this addition comes via reallocations away from money centres like the UK and Caribbean which the PRC may have used to course purchases through instead. Japan comes in second at a "paltry" $765.7B. Otherwise, the caveats from the previous post apply.

So, once again, those calling for Chinese portfolio "diversification" are thwarted like yours truly. In my (next to useless) defence, Chinese holdings have nonetheless fallen from a peak of $939.9 billion in July 2009. Dina Kos makes a gloating op-ed about the enduring greatness of Treasuries in the pages of the FT, while Alphaville explains the intricacies of these revisions and offers a table of reallocations which pretty much sums up the addition and subtraction which has led to the current result. See the above table and weep (or cheer).