Another month, another fall in China Treasury holdings

[c1ue]

China's holdings fall another $11.5B

Overall foreign holdings increase $43.7B anchored by the usual suspect, the UK ($25.2B) but joined in February 2010 by those stalwart economies: Canada ($16.4B) and Thailand ($8.8B).

Looks like the BoC Goldman connection is up and running?

Even with this number, foreign percentages of net Treasury issuance continues at low levels: $417B net issuance projected for Q1 2010 vs. the $60.7B purchased by major foreign holders in the first 2 months.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
(in billions of dollars)
HOLDINGS 1/ AT END OF PERIOD
	Feb	Jan	Dec	Nov	Oct	Sep	Aug	Jul	Jun	Jun	May	Apr	Mar	Feb
Country	2010	2010	2009	2009	2009	2009	2009	2009	2009	2009	2009	2009	2009	2009
China, Mainland	877.5	889	894.8	929	938.3	938.3	936.5	939.9	915.8	776.4	801.5	763.5	767.9	744.2
Japan	768.5	765.4	765.7	754.3	742.9	747.9	727.5	720.9	708.2	711.2	677.2	685.9	686.7	661.9
United Kingdom 2/	231.7	206.5	178.5	153.8	106.3	125.1	102.5	95.4	89	213.5	163.7	152.7	128.1	129
Oil Exporters 3/	218.8	218.4	207.4	208.3	209	205.9	209.8	209.9	211.8	191.2	192.9	189.6	192	181.8
Brazil	170.8	169.1	169.3	165.8	164.9	153.6	146	146.8	148.5	139.8	127.1	126	126.6	130.8
Hong Kong	152.4	146.6	148.7	142.1	137.8	128	120.5	111.1	95.7	99.8	93.2	80.9	78.9	76.3
Carib Bnkng Ctrs 4/	144.5	143.7	128.4	123.4	114.3	116.7	125.2	138.7	135.3	191.9	195.2	205.1	214	189.5
Taiwan	121.4	119.6	116.5	115.4	115.6	115.1	112.9	114.4	114	77	75.7	78.3	74.8	72.6
Russia	120.2	124.2	141.8	151.4	145.9	145.1	144.9	141.3	143.3	119.9	124.5	137	138.4	130.1
Switzerland	81.8	84.4	89.7	89.6	85.3	82.7	82	81.9	85.7	72	63.7	64.2	67.7	68.2
Luxembourg	77.9	79.1	88.4	80.2	79.5	87.5	83	80.8	92.9	104.3	96.2	97.4	106	92.1
Canada	67.1	54.7	52.8	50.7	44.8	42.3	30.2	24.1	23	18.4	11	12.5	11.3	10.3
Germany	49.9	49	47.8	48.7	47.9	48.8	50.1	51.2	48.9	53.8	55.1	54.4	54.9	56.5
Singapore	42.6	41.3	39.2	37.5	36.3	39.4	43.1	43.4	41.9	40.8	39.6	39.7	39.1	39.3
Thailand	42.1	33.3	33.3	29.6	28	27.9	31.4	29.3	27.5	29.7	26.8	28.5	26	39.7
Korea, South	39.8	39.7	40.3	40.2	43.3	39.9	39.8	38.7	37.4	36.3	37.4	35.4	33.1	33.3
Ireland	38.7	39.2	43.6	43.1	42.6	37	40.8	42.9	50.6	46.3	50.6	49.7	54.7	54.5
Mexico	33.9	34.4	36.8	31.9	26.5	27.8	33.2	33.4	35.2	29.5	31.5	35.3	36.2	37.8
France	32.5	35.9	30.5	40.4	29.1	25	28	17.5	18.9	26	25.9	30.6	27.1	16.8
India	31.6	32.7	32.5	34.5	35.8	38.8	41.5	41.8	42.2	39.3	38.8	38.5	38.2	34.6
Turkey	27.3	27.5	28.1	29.4	30.3	28.1	28.5	27.1	27.3	27.5	28.8	27.2	30.2	32.4
Poland	22.6	22.3	22.9	21.9	21.9	21.5	21.3	20.9	20.5	5.6	5	3.9	3.8	4.4
Egypt	21.7	19.4	18.9	19.4	14.3	14.9	14.5	12.7	11.5	17.3	18.6	18.5	18.5	19.1
Italy	20.9	21.3	21.1	21.6	21.6	20	19.3	19.8	19.1	16.7	16.7	16.1	16.6	16.4
Netherlands	20.4	20.7	20.4	21	20.5	22	22	22.2	19.6	18.9	16.4	16.5	17.6	16.1
Israel	18.9	16.8	13.8	15.1	14.5	16.9	16.2	15.5	16.6	18.1	19	19.1	19.4	17.4
Belgium	17	17.4	17.3	17.4	16.9	17.2	17.7	17.8	17.9	15.7	15.7	15.8	15.4	14.5
Colombia	16	16	17.3	17.2	18.3	18.3	17.9	16.4	13.3	11.8	12	11.5	11.3	11.5
Sweden	16	15.7	15.2	15.5	15.3	14.4	12.7	12.5	12.5	16.4	13	12.7	12.5	12.6
Australia	14.4	15.4	16.3	13.7	12.8	12.3	12.5	12.1	12.2	9.9	9	8.4	5.8	8.1
Norway	13.6	12.3	12.1	8.5	7.3	7.6	7.1	11.3	11.1	28.7	28.3	27.5	26.2	21.1
Spain	13.4	13.7	13.7	13.1	13.1	12.3	12.8	11.6	11.1	5.5	4.7	4.5	4.5	4.6
Philippines	12.5	11.3	11.7	11.7	11.4	11.4	11.9	10.9	11.2	11.6	11.8	12	12.4	12.6
Chile	12.3	12.5	12.4	12.1	12.4	12.8	12.9	13.4	14.2	14.3	14.7	15.1	15.5	15.2
Malaysia	10.9	11	11.7	11.8	11.7	11.7	11.9	12.5	12.4	11.7	12.3	11.6	10.6	8.4
All Other	148.7	147.4	150.6	153.8	158	159.4	161	163.7	162.5	136.4	139	136.6	142.4	147.7
Grand Total	3750.5	3706.8	3689.8	3673.1	3574.2	3573.6	3529.3	3503.9	3458.5	3383.5	3292.6	3262.1	3264.6	3161.5
Of which:
For. Official	2674.8	2679.3	2704.6	2732.6	2712.8	2697.4	2688	2674.1	2623.7	2295.7	2287.5	2253.6	2248.6	2198.1
Treasury Bills	502.8	508.5	534.3	586.6	598	597.7	607.3	606.6	571.9	571.9	586.2	530.6	542.7	521.2
T-Bonds & Notes	2172	2170.9	2170.3	2146	2114.8	2099.7	2080.7	2067.5	2051.8	1723.8	1701.3	1723.1	1705.9	1676.9

[FrankL]

Re: Another month, another fall in China Treasury holdings

so... who is buying all the newly issued debt?
Domestic savers? I though savers these days were people who were reducing their debts, not buying government bonds.
Banks through a grand circle jerk by the FED?

[Supercilious]

Re: Another month, another fall in China Treasury holdings

so... who is buying all the newly issued debt?
Domestic savers? I though savers these days were people who were reducing their debts, not buying government bonds.
Banks through a grand circle jerk by the FED?

Well, first I think c1ue is right, the BoC, Goldman (and other similar financial squids) connection is up and running. This most probably is due to a shift in Chinese holdings in street name accounts. There is a good read on this subject in a piece written by Michael Pettis.

Here is a relevant quote:

The revelation last week that Chinese holdings of US Treasury obligations fell in December by $34.2 billion, to $755.4 billion, generated a frisson of fear and excitement, leading one prominent newspaper to worry that “If there is one thing that gets investors twitchy, it is the fear that China is losing its appetite for US government bonds.”

And shouldn’t they get twitchy? After all this reduction in Chinese holdings of Treasury bonds comes from the USG’s TIC data, so it must be true that China is dumping dollars, right?

No need to twitch, it means no such thing. First of all, the data from which this was derived indicates national ownership of USG bonds only to the extent that foreigners are directly registered holders. It says nothing about what happened to the large amount of bonds held by the PBoC and other Chinese investors indirectly or in street names.[...]So was China a net seller of dollar assets in December? Almost certainly not. Just look at the PBoC balance sheet. PBoC reserves rose in December by $61.3 billion, of which $39.0 billion was the trade surplus.

Remember that China has a large current account surplus which necessarily must be recycled abroad, and the US has a large current account deficit which necessarily must be funded abroad. It would be astonishing if, under these circumstances, total Chinese holdings of USD assets declined, and of course it is impossible that they declined faster than the willingness of other foreigners to replace them.

So, if the official Chinese holdings are decreasing but the reserves on the balance sheet of PBoC are increasing, it's all smoke and mirrors....