Japan buys hundreds of billions of dollars in August

China Economic network Beijing, November 10 (Liu Neu) according to data from the US Treasury, Japan's net purchase of US government bonds was $105 billion trillion by August this year, and its holdings increased to $731 billion, surpassing the country's biggest buyer of US Treasuries for the month.　　Japan bought more than 10% of the total market, with a whopping 17% percentage points, the biggest increase since the 2004 surge of 25%. By contrast, China shrank its holdings of US Treasuries in August, from $800.5 billion trillion in July to $797.1 billion trillion, to a reduction of about 3.4 billion dollars. Still, China remains the largest holder of US Treasuries by the end of August.　　The US Treasury's third-largest holder, Britain, also increased its holdings of U.S. Treasuries in August, according to data from the U. Mizuho Asset Management Company (Mizuho Asset Management Co. ) and Mitsubishi UFJ Asset Management Corporation (Shosha UFJ Asset Management Co.　　Are the main buyers of U.S. government bonds, the main reason for their large holdings is that the US government has taken a positive and correct approach to the recession.　　Institutional investors believe the current US government response to the economic crisis is very similar to the Japanese government's response to the recession in the 1990s, which has not only boosted growth but also boosted the return on investment in government bonds. The Japanese bond Index, compiled by Merrill Lynch and Bank of America Corp., has risen 90% in the 8-year period from January 1990 to October 1998, while the Nikkei 225 index has fallen by 67% per cent over the same period.　　The return on investment bonds is much higher than the return on investment stocks. Akira Takei, an analyst at Mizuho Asset Management, said: "The current U.S. economy is facing a double whammy: a recession and a credit crunch." He said: "If there is deflation the U.S. economy will suffer a third blow." He added: "However, deflation is good for bond investors and means higher returns." "It's the main reason Japanese investors buy US government bonds," said Michael Pond, an interest-rate policy analyst at Barclays PLC, another US government bond trader. Barclays forecasts 2010 US inflation will rebound to 1.9%, well below the average of the past 10 years. He said: "Japanese investors because of similar personal experience, so bold to predict the United States will be deflation and therefore make a large number of purchases of U.S. government debt decision." ”