China rapidly expands investments in Japanese government bonds

Saturday 31st July, 11:45 AM JST

TOKYO —

China sharply expanded investments in Japanese government bonds in the first months of this year as part of the country’s apparent move to increase relative exposure to stable Japanese vehicles against the backdrop of the European debt crisis, data from the Japanese Finance Ministry and other sources showed Saturday.

While welcoming the interest from deep-pocketed China as it sits on rapidly growing foreign currency reserves, Japanese officials remain guarded about its intentions and conduct, considering it possible that the sharp expansion in investments may turn out to be a temporary action to shift funds to ‘‘safe’’ instruments. According to the Japanese Finance Ministry, China purchased 1.28 trillion yen more Japanese securities than they sold in the January-May period this year.

The amount —for just less than half a year—already eclipses the record 253.8 billion yen in net purchases for a whole year logged in 2005. In May alone, the month for which the latest data are available, its net purchases surpassed 735.2 billion yen, a record high monthly figure.

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Latest 15 of 25 Total Comments Show All

jruaustralia at 11:31 PM JST - 31st July

Ni Hao to our new overlord lol

I hope the Chinese are smart enough to retain English as the international language when they take over the world. I'd like to keep my job, too.

Unlikely, the Chinese have poured money on so-called Confucian centers worldwide to teach Mandarin, now in 90 countries....

http://en.mercopress.com/2010/07/21/forty-million-world-wide-learning-chinese-at-confucius-institutes
jruaustralia at 11:42 PM JST - 31st July

It likely has nothing to do with Japan being safer than Europe (despite how much Japan's economic ministers would have people believe), it's just that China has a huge surplus of foreign currency, and they've got to spend it somewhere, and most people are aware that diverse investments are safer than putting all your eggs in one basket, both for individuals and for countries.

It's best to say that there's always a catch in investing, so don't buy things you'll end up regretting or worse :)
mushroomcloud at 02:34 AM JST - 1st August

Japan, even though losing it's status this year as the 2nd largest economy in the world to China, can still be summed up as the Switzerland of Asia, affluent, comfortable, yet totally irrelevant in world affairs.

That said, China did the right thing in buying into some safe Japanese investments. Much, much more to come. This appears to be just the mere beginning as China purchases Japan.
Jeff198524 at 05:02 AM JST - 1st August

Buying a few billion dollars in bonds means China owns Japan? Grow up and get real, Japan isn't in debt and China isn't going to own Japan.
okapake at 07:19 AM JST - 1st August

"Japan isn't in debt"? Japan's budget (their spending) is twice what they take in! China is not going to end buying only "few billion dollars"!

Get real jeff!
okapake at 07:39 AM JST - 1st August

And Japan's budget deficit is approaching 200% of it's GDP!
IamBiking at 10:47 PM JST - 1st August

Could also be to make Japanese yen stronger.
Jeff198524 at 04:59 AM JST - 2nd August

Japan's assets are greater tha it's debt. I suggest you do some research. Besides, what little debt there is will be paid off. of course you all despise Japan, so I don't expect you to see reason.
Jeff198524 at 05:05 AM JST - 2nd August

Also, America's debts and obligations total at least 800% its GDP. America will survive, but Japan will be destroyed. Please explain how.
okapake at 06:16 AM JST - 2nd August

Well, we'll wait and see as Japan raises the consumption tax to unheard of levels.
okapake at 06:49 AM JST - 2nd August

jeffychan - and I don't know where you got that 800% figure for the U.S., but it's projected to be 90% for the U.S. for 2010 and 2011.
Jeff198524 at 07:16 AM JST - 2nd August

I'm counting Social Security and Medicare. Also, local, household, state, corporate and household debt. Add all that plus the national debt together and you get $112 trillion dollars, which is 800% of America's GDP.

Also, Japan holds over $760 billion in US debt, and Japanese companies have made 73 major acquisitions this year so far, so America will be owned by foreigners long before any other nation.
Jeff198524 at 07:19 AM JST - 2nd August

Where did you get the info as to how high the consumption tax will be?
okapake at 07:26 AM JST - 2nd August

jeffychan - Japan government's current debt is 621 trillion yen.
okapake at 07:29 AM JST - 2nd August

jeffychan - and you have strange ways of combining economic figures to come up with hilarious results that allow ridiculous facts.