(Yicai) Dec. 20 -- China reduced its holdings of US Treasury bonds for the seventh consecutive month in October to the lowest since May 2009, according to the latest data.

China cut its ownership of US Treasuries by USD8.5 billion to USD769.6 billion in October from September, according to data released by the US Department of Treasury yesterday. The country’s holdings have been slashed by USD99.7 billion since the end of March.

China’s remains the second largest foreign creditor of the US after Japan, whose position climbed by USD11.8 billion to USD1.1 trillion. China previously trimmed its stash of US treasuries for seven months in a row from August last year to February.

China’s orderly reduction of US Treasury bonds is necessary, Yu Yongding, a member of the Chinese Academy of Social Sciences, said at a forum earlier this month. The US debt-to-gross domestic product ratio will continue to climb, so the country’s net overseas debts will keep on deteriorating, also affected by the US Federal Reserve’s continuous rate hikes, he added.

China should adjust its overseas asset-liability structure faster and increase its return on foreign assets by reducing its holdings of US bonds which have low coupon rates, Yu added.

In October, there was a net outflow of USD83.8 billion when taking into account foreign acquisitions of short-term and long-term securities as well as banking flows, the US Department of Treasury said yesterday. Of this, net outflow of private funds was USD68.4 billion, and net outflow of government funds was USD15.4 billion.

Editor: Kim Taylor