They could have been selling US Treasury bonds but in spite of that, China remains the largest foreign holder of U.S. Treasury debt.
The Treasury Department announced that under annual benchmark revisions released on 26 February 2010, China's holdings of U.S. Treasury securities stood at US$894.8 billion at the end of December, keeping it in first place ahead of Japan.
On Feb. 16, the government reported data that showed China had been surpassed by Japan.
However, the government said in the new report that those figures did not account for purchases by Chinese investors in such places as Britain.
When those purchases are taken into account, the government said that China's holdings in December grew by $139.4 billion above what was reported on Feb. 16.
That increase put China back into first place as the top foreign holder of U.S. Treasury securities at $894.8 billion followed by Japan, now back in second place, at $768.8 billion.
The revised figures represent the annual revisions Treasury makes based on a more detailed report of the actual foreign holdings of the Treasury debt.
That survey revised the figures through June 2009, and those more accurate figures were used to update the monthly reports through December 2009.
The revised figures did show that China reduced its holdings in December compared with November, a drop of $34.2 billion.
However, with the more accurate assessment of the actual ownership of the securities, the levels of China's holdings were much higher than expressed in the report two weeks ago.
The replacement of China by Japan as the largest foreign holder of Treasury securities when it was reported two weeks ago had raised worries that China was carrying through on comments it made about diversifying its holdings based on rising concerns about America's soaring federal budget deficits.
Some economists had seen the change in China's position as a warning signal that the biggest holders of U.S. debt were starting to dump those holdings.
Such a development could dramatically increase the interest bill the federal government must pay to finance its deficits and also drive up the cost of borrowing for U.S. businesses and consumers.
On Feb. 1, President Barack Obama released a budget plan that projects the deficit for this year will total a record $1.56 trillion. That would surpass last year's record of $1.4 trillion deficit, reflecting a severe recession that has cut into government revenues and increased spending to stabilize the banking system and jump-start the economy.
