Japanese Finance Minister Yoshihiko Noda said yesterday the government was closely monitoring China’s ramped-up buying of Japanese government debt and would check with Beijing on its motives.
“We are paying close attention” to recent increases in Chinese purchases of Japanese government bonds [JGBs], Noda said during a session of the upper house financial affairs committee, Dow Jones Newswires reported. “I don’t know the true intention” of China regarding its growing appetite for JGBs.
PHOTO: REUTERS
CLOSE COOPERATION
However, Tokyo plans to “closely cooperate [with Beijing] and examine its intention,” he said.
China bought ¥583.1 billion (US$6.9 billion) of Japanese bonds in July, Japan’s finance ministry said on Wednesday, as the Asian giant continued to ramp up purchases of Japanese debt.
The figure was higher than the ¥456.7 billion worth of securities purchased in June.
The news came after the yen hit a fresh 15-year high against the US dollar on Wednesday. Currency traders say China’s buying of yen-denominated assets, while too small on its own to sharply push up the yen, could be bolstering the currency indirectly.
BUYING UP DEBT
For the first half of the year, China bought ¥1.73 trillion of debt, nearly seven times the full-year record of ¥253.8 billion set in 2005.
In May alone, Chinese investors bought a net ¥735.2 billion in Japanese government bonds.
China has sought to diversify its vast investments away from the US dollar and Europe since the onset of the financial crisis. Most of the bonds bought by China are thought to be used by the government to manage its foreign reserves, which surged to a record US$2.454 trillion at the end of June.
The reserves, already the world’s largest, grew 15.1 percent from a year ago, the People’s Bank of China said on its Web site.
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