China boosted its holdings of U.S. Treasuries in January, following months of deduction in late 2011, according to the Treasury Department’s monthly International Capital report.

Preliminary data showed that China’s holdings rose 7.6 trillion to 1.160 trillion U.S. dollars from 1.152 trillion in December.

The country remained the U.S. largest creditor in January, but Japan threatened to take the No.1 position after liftings its holdings by 21 billion to 1.079 trillion U.S. dollars in the month.

That doesn’t necessarily mean that China’s increased much holdings of U.S. debt, considering the retained returns created last year, said Mei Yuxin, a researcher at the Chinese Academy of International Trade and Economic Cooperation.

While China’s trying to diversity its foreign exchange reserve, the world’s largest, recent data showed that it had been declining for at least two months since October. China’s foreign exchange reserve hit 3.18 trillion U.S. dollars in the end of last year.

China cut its holding of U.S. debt by 8.2 billion U.S. dollars in 2011 and increased holdings of Japan’s debt by 541.4 billion yen in 2011, according to central banks’ data.

Source:caijing