A major upward revision of the U.S. Treasury Department‘s assessment of China’s holdings of U.S. securities last year shows the U.S. is far more indebted to the emerging power than originally thought.

Treasury’s preliminary report of foreign holdings of securities is based on better data than its first estimate posted last year, helping to paint a more accurate picture of foreign purchases or sales of U.S. assets. The data are likely to prove fodder for many analysts who have suspected that China has been routing a significant portion of its purchases of U.S. Treasury securities through other major financial centers such as London to play down its debt profile in the U.S., a politically sensitive subject in Washington.

China’s holdings in the month of June 2010 were revised up 32%, around $268 billion, from the previous estimate to $1.112 trillion. The U.K., however, saw a downward revision of almost the exact amount, to $94.5 billion from a previous estimate of $363.7 billion.