Here is a brief article from Caijing.com that confirms, for a while now, that the Chinese government has been slowly but surely unwinding from buying US Debt. And if China is doing this, it's very likely that Russia, Brazil, India, The Gulf States and other BRIC savers are also doing much the same. This unwinding will be slow but sure, to avoid tipping the Dollar into inflation too soon and will take a few years -- providing, of course, that there are no further trainwrecks occurring within the US Economy.
Western analysts put forward the excuse that China has lowered her purchase of US Debt in order to accomodate the expected upward revaluation of the Yuan. Some of these analysts say they've even pulled out of Chinese investments because of this fact. But last I heard, China's GDP increase jumped to 11.9% in the last quarter with very little expectation of Yuan inflation. Seems a good enough reason to invest to me...
So, not only is Bernanke inflating away the dollar's value but, notably, the only mechanism for the US government to obtain or generate sufficient foreign credit is now slowly but surely disappearing. So this problem has become a Dollar Debt Bomb with two fuses.
China trimmed its holdings of U.S. treasury by 11.5 billion U.S. dollars, the fourth consecutive decline.
The U.S. Treasury Department said Thursday that China's holdings of U.S. debt dropped 11.5 billion U.S. dollars in February, the fourth consecutive decline.
China had trimmed its holding of U.S. Treasury debt by 9.3 billion in November 2009, 34.2 billion in December 2009 and 5.8 billion in January this year. The total number of debt cut had reached as much as 60.8 billion.
Analyst said a likely explanation for part of the drop is that China is facing growing pressure from the United States to allow its currency, the yuan, to rise in value against the dollar. With enhanced expectation of Renminbi appreciation, some financial institutions have realized their overseas assets and brought it back, citing officials from China's Foreign Exchange Department.
Despite the decline, China is still the largest foreign holder of U.S. Treasury debt, said the U.S. Treasury. Japan retained the No.2 spot with 768.5 billion U.S. dollars, a drop of 0.4 percent from the January level. Holdings by Britain, however, jumped 12.2 percent to 321.7 billion U.S. dollars.