China offloaded 32.5 billion U.S. dollars worth of U.S. Treasury bonds (T-bonds) holdings in May but remains the largest holder of U.S. debt, the U.S. Treasury Department reported last Friday.



After the cut, China holds 867.7 U.S. dollars of U.S. government debt.



Analysts believe that the sale was a wise choice as the U.S. Dollar Index soared in May.



In the same month, China's foreign exchange reserves fell by around 51 billion U.S. dollars despite a 19.5 billion U.S. dollars trade surplus and 8.1 billion U.S. dollars in foreign direct investment inflows.



Japan, the second largest holder of U.S. T-bonds, reduced its debt holdings by 8.8 billion U.S. dollars, to 795.5 billion U.S. dollars.



China's State Administration of Foreign Exchange has reiterated that China is a responsible long-term investor and rejected concerns that it would use China's foreign exchange investments as an "atomic weapon" against investment targets.



Earlier this month, Japanese media reported that Beijing has drastically revved up its purchase of Japan's government bonds in2010, making net purchases of 540 billion Japanese yen (6.2 billion U.S. dollars) from January to April.



At the same time, China's purchase of euro-denominated bonds has declined because of the eruption of European debt crisis.



By People's Daily Online

