Photographer: Xaume Olleros/Bloomberg

China Increases U.S. Treasury Holdings for Fourth Straight Month

  • Chinese holdings grow as reserves rise, yuan stabilizes
  • Japan also boosts ownership and remains biggest holder

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China raised its holdings of U.S. Treasuries for a fourth straight month, a sign the nation is rebuilding its foreign-currency reserves as the yuan stabilizes.

China, the second-largest holder of Treasuries, held $1.10 trillion in May, up $10 billion from a month earlier, according to Treasury Department data released Tuesday in Washington. Japan, the biggest holder, owned $1.11 trillion, up slightly from its total in April.

The two countries account for more than one-third of all foreign ownership of Treasuries, which gained by $49.9 billion in May to $6.12 trillion, the figures showed. Of that total, $3.94 trillion were government holdings.

China’s foreign-exchange reserves rose for fifth straight month in June as the currency stabilized and investors were less eager to move money abroad. Stricter capital controls and a stabilizing yuan this year have eased outflow pressures as policy makers encourage foreign investors to channel more money into the country.

The Treasury’s report, which also contains data on international capital flows, showed a net inflow into U.S. long-term securities of $91.9 billion after a $9.7 billion inflow in April. It showed a total cross-border inflow, including short-term securities such as Treasury bills and stock swaps, of $57.3 billion following a $74.4 billion inflow the prior month.

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