China's holding of U.S. Treasuries climbed to a 11-month high of $1.17 trillion in July, marking the sixth consecutive month of growth, along with the expansion of the foreign exchange reserve and a strengthened renminbi.
The U.S. Treasury Department said on Monday that China's holdings were $19.5 billion higher than in June and up by $114.9 from January. China remains the largest foreign holder of U.S. Treasuries, $52.9 billion more than Japan.
The value of U.S. Treasuries owned by the Chinese government accounted for about 37.85 percent of its foreign exchange reserve by July, up from 35.06 percent in January, according to the State Administration of Foreign Exchange.
An easing of capital outflows and a stronger Chinese currency have facilitated purchases of U.S. Treasuries, said experts, and this trend may continue in the short term.
"Cross-border capital flows and the foreign exchange market's supply-demand situation were generally balanced in August, while the rise of asset prices in global financial markets has pushed the growth of foreign exchange reserve," a statement of the SAFE said on Monday.
Further stabilized cross-border capital flows in the future will keep the foreign exchange reserve within a "reasonable and moderate" range, it said.
The country's foreign exchange reserve grew for seven consecutive months to $3.09 trillion by August, after a seven-month drop to a record low of $2.998 trillion in January.
A stronger renminbi has boosted the increase in the foreign exchange reserve, while capital outflow pressures have been released, said Wen Bin, chief researcher with China Minsheng Bank. His expectation of a steady growth of Chinese economy in the remaining four months this year will support a relatively stable renminbi exchange rate.
"But its fast appreciation earlier this month may be replaced by a two-way fluctuation against the U.S. dollar", said Wen, who suggested further improving the market-oriented reform of the exchange rate mechanism.
The yuan has appreciated more than 5 percent against the U.S. dollar so far this year, almost offsetting the 7 percent weakening in 2016.
