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China Briefings

Reports on China issued by Samsung Economic Research Institute

China's Cache of US Treasuries and Its Effects

China's Cache of US Treasuries and Its Effects

Samsung Economic Research Institute Beijing Office

Aug. 6, 2009

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1. US Treasury Bonds Held By China

  China's huge accumulation of US Treasury bonds has transpired in four stages.

• 1st stage (1972 to early 1985): Due to lack of foreign currency and poor understanding of the US financial markets, China did not purchase US Treasury bonds.

• 2nd stage (1985 to late 1993): China began to buy US Treasury bonds but the monthly purchases were less than US$1 billion.

The US government bonds bought by China were mostly short-term.

• 3rd stage (1994 to late 1999): China's stockpile of US government bonds started to rise significantly with monthly purchases of more than US$1 billion.

•  4th stage (after 2000): China's holding of US Treasury bonds grew sharply.

- From 2001 to 2006, US Treasury bonds held by China showed an annual growth of US$78.6 billion, US$118.4 billion, US$159.0 billion, US$222.9 billion, US$310.9 billion and US$396.9 billion every year.

- At the end of 2007, China held the second-largest amount (US$477.6 billion) of US government bonds after Japan.

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