China, the largest foreign U.S. creditor, reduced its holdings of U.S. government securities last year for the first time since the Treasury Department began compiling the data in 2001.
The worldâ€™s second-largest economy held $1.15 trillion Treasuries as of Dec. 31, down from $1.16 trillion at the end of 2010, according to Treasury data released yesterday. The U.S. revised the figures to show that China held about $51 billion more than reported earlier last month. The revision shows nationâ€™s holdings peaked at $1.3149 trillion in July.
Chinaâ€™s policy makers have advocated diversification of the nationâ€™s foreign-exchange reserves away from U.S. assets after more than doubling its holdings of Treasuries since 2007 in the wake of the global financial crisis. Yields on benchmark 10-year Treasury notes dropped to a record low of 1.67 percent in September as investors sought a haven from Europeâ€™s sovereign- debt crisis and the Federal Reserve pledged to keep borrowing costs close to zero to sustain economic growth.
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