It turns out China does own more Treasury bonds than the government’s official numbers have been letting on.

China held $1.16 trillion of U.S. government bonds at the end of 2010, Treasury said Monday in its preliminary revision of data on foreign portfolio holdings.



Onto something

That’s up $268 billion from the previous official tally covering the same dates, released two weeks ago, and puts China ahead of the No. 2 U.S. foreign lender, Japan, by about the same amount.

The revision appears to confirm the suspicions of some China watchers that the biggest U.S. creditor’s government-bond stake was being lowballed in the official data.

Some observers such as Derek Scissors of the Heritage Foundation noted that China’s Treasury holdings inexplicably held steady over the past year even as the Chinese ran a substantial trade surplus and bought dollars to limit the appreciation of their currency, the yuan.

Also raising eyebrows was the sharp rise in Treasury holdings attributed to the United Kingdom. Scissors and others said those trends didn’t make sense unless China was buying Treasuries through accounts in the U.K.

Monday’s revisions certainly seem to point in that direction. While China’s holdings rose by $268 billion in the revised numbers, the U.K. holdings fell by the same amount.

Even so, there are reasons to believe China’s actual government bond take is much bigger. Fed chief Ben Bernanke this month put the number at $2 trillion or so in congressional testimony,  for instance. Our dollar, everyone’s problem.

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