China Passes Japan as Biggest U.S. Treasuries Holder

By John Brinsley and Rebecca Christie

Nov. 18 (Bloomberg) -- China surpassed Japan in September to become the biggest foreign holder of U.S. Treasuries, as foreign investors sought the relative safety of government debt as stocks plunged 9.1 percent that month.

Total net purchases of long-term equities, notes and bonds increased a net $66.2 billion in September from $21 billion the previous month, the Treasury said today in Washington. Including short-term securities such as stock swaps, foreigners bought a net $143.4 billion, compared with net buying of $21.4 billion the month before.

China led all foreign official investors in September by posting a net increase in U.S. Treasuries for the sixth month in the past seven, bringing its total ownership close to $600 billion. Japan was a net seller of Treasuries for the fourth month in the past six.

??The details of the report paint a much more positive picture of cross-border investments than expected,? said Michael Woolfolk, a senior currency strategist at Bank of New York Mellon Corp. ??China, along with others, is showing more demand than anticipated for U.S. assets.?

Economists predicted international investors would buy a net $27.2 billion of long-term securities in September, based on the median of seven estimates in a Bloomberg News survey.

China leapfrogged Japan, increasing its Treasury holdings by $43.6 billion to $585 billion, the report said. Japan, now the second-largest foreign owner of U.S. government debt, reduced its holdings by $12.8 billion to $573.2 billion.

China??s ownership of U.S. government debt has doubled since July 2005, while Japan??s holdings are down from a peak of $699 billion in August 2004.
maladroit Reviewed by maladroit on . US treasury facing a crisis Who will buy?: John Kemp Thu Oct 30, 2008 7:53pm IST By John Kemp LONDON (Reuters) - The Treasury's need to shift a record volume of debt securities in the next twelve months recalls the rose seller in the musical adaptation of Charles Dickens' Oliver Twist. She asks "Who will buy my sweet red roses, two blooms for a penny?." Finding no takers, she ends the disconsolately wondering "Must be someone .. who will buy?." Anthony Ryan, the acting undersecretary for domestic finance at Rating: 5