Friday, October 21, 2011

China cuts US debt holdings after downgrade

China has been found to have sharply reduced its holdings of US government bonds after a major credit rating agency downgraded US debt for the first time in August.

Data released by the US Treasury Department on Tuesday show that China's holdings of US government bonds fell by 36.5 billion dollars in a month, to 1.137 trillion dollars at the end of August. China remains the largest foreign US creditor.

China has not sold more than 10 billion dollars' worth of US government bonds in a month at any other time in the past year.

China had been investing its more than 3 trillion dollars' worth of foreign exchange reserves mainly in US government debt and other dollar-denominated assets.

But the country is hastily diversifying its investment of its reserves -- the world's largest -- in the wake of the US debt problem and European credit crisis. source