Crescenzi: China Diversifies Out of Treasuries

08-17-2009 • CNBC

New data on international capital flows into U.S. financial assets were released Monday indicating that in June China was a net seller of $25.1 billion of U.S. Treasuries. Many will put the sale in the context of China’s $38 billion buying splurge in May, but the better metric is put the net purchases for May and June in the context of its $122 billion accumulation of international reserves during the two months. In other words, China invested very little of its new money in Treasuries in May and June—just over 10%, a sharp contrast to the 60% to 70% figures seen in recent years. China’s investment in Treasuries in recent months looks even smaller when data for April are included. In April, China accumulated over $55 billion of international reserves, yet it was a net seller of $4.4 billion of Treasuries.