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China boosted its Treasury holdings in September

China boosted its Treasury holdings in September

November 16th, 2010 by JEANNINE AVERSA, AP Economics Writer in News

WASHINGTON (AP) - China, the biggest buyer of U.S. Treasury securities, boosted its holdings for the third straight month, the Treasury Department reported Tuesday.

China's holdings of Treasury debt rose to $883.5 billion in September, the Treasury Department says in a report. That's a 1.7 percent increase from August. For much of this year, China has been increasing its holdings of Treasury debt.

The report shows that China and other countries still have a robust appetite for Treasury debt even as the U.S. government is running annual budget deficits topping $1 trillion. Overall, foreign governments increased their purchases of Treasury securities by $39.5 billion in September, a record high. A sustained drop in foreign demand for Treasury debt could lead to higher U.S. interest rates, slowing the economy.

Japan, the second-largest holder, expanded its portfolio of Treasury debt to $865 billion, a 3.4 percent increase from August. Britain, the third-biggest holder, boosted its stake to $459.1 billion, a 2.1 percent increase.

Total holdings of Treasury securities by all countries rose to $4.2 trillion in September, an increase of 1.3 percent from August. Of that total, $2.8 trillion is held by foreign governments and central banks.