China's big increase in South Korean debt in the first half increased 111% from the end of last year

Shanting China's holdings of South Korean government bonds rose 111% to 3.99 trillion won (about $3.4 billion trillion) in the first half of the year, boosting South Korean government debt to its biggest rebound in 3 years, according to data released yesterday by the South Korean Financial regulatory Services Bureau. It is reported that China's holdings of South Korean government debt accounted for foreign ownership of the amount of South Korean government debt 19%, higher than last year's 10%.　　But China's holdings of government bonds account for only 0.1% of its $2.45 trillion trillion in foreign-exchange reserves, well below its $20.1 billion trillion in Japanese Treasury holdings. Analysts point out that if China buys South Korean government bonds at this rate, it will reach 4 trillion won by the end of the year.　　That would spur bond markets, causing a serious imbalance in the supply and demand of South Korea's debt, which could lead to a sharp drop in yields. "It is important for China to diversify its foreign-exchange reserves, although US Treasuries will not default, at least to a large extent," McFadden, winner of the 2000 Nobel Prize in Economics, said in an interview with the first financial daily. "China is buying a lot of European and Japanese bonds recently. Japan's finance ministry said August 9 it had bought 456.4 billion yen (about $5.3 billion trillion) of Japanese government bonds in June, increasing its holdings for the 6th consecutive month.　　China's net gain of 1.73 trillion yen (about $20.3 billion trillion) in the first half was the highest level in more than 5 years. Earlier, China's second consecutive month of net selling of US Treasuries, according to data released 16th by the US Treasury, reduced the size of China's holdings of US Treasuries by $24 billion trillion to $843.7 billion trillion, with long-term US debt reducing by $21.2 billion trillion.