Well-known Chinese news site Sina recently reported that China has relinquished the title of the largest U.S. bond owner to Japan for two consecutive months now. China just revealed the official numbers showing that the total capital outflow in 2016 reached US$305.3 billion, which was a record high. Chinese held U.S. bonds are on the decline. As of the end of November 2016, China’s U.S. bond level was US$1.0493 trillion, which was US$66.4 billion less than the end of October. This was the lowest level in six years. Analysts expressed the belief that the cause of China selling U.S. bonds was to defend the Chinese currency, the RMB, which has been suffering rapid depreciation. Since the Chinese government was worried about the potential market disorder resulting from capital outflow as well as currency depreciation, the Chinese authorities have been applying capital outflow controls on the investment level.
Source: Sina, January 20, 2017