China increases US treasury holding, up $17.7 billion

Amidst the declining European debt crisis, Chinas has been seeking refuge in the safety of US Treasury bonds, raising its holdings for the first time in six months.

In its latest monthly report on global capital flows, US Treasury data showed net foreign purchases of US long-term securities by foreign investors soared to a record $140.5 billion in March from $47.1 billion in February, and more than doubled, the Treasury data showed.

The report revealed China as the biggest holder of US sovereign debt. China has been buying $17.7 billion in treasury securities from February 2010, taking its US Treasury holdings to $895.2 billion.

The last time China increased its bond holdings was in September 2009,  allowing its ranking as the largest holder of US Treasury debt lapse in favour of Japan.(See: China no longer largest holder of US debt).

The big increase in buying US treasury has been driven by concerns about Greece's debt crisis and fear of exposure to the euro as investors are nervous about eurozone's management of the European debt crisis.

The other factor influencing the increase is the revival of the US economy. (See: US trade deficit expands to $40.4 billion in March)