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China extended a record buying spree of Japanese debt in June, as sovereign debt concerns buffeted the euro. China is now the second largest holder of Japanese debt.
Chinese investors bought a net 508 billion yen of short-term Japanese debt in June, after a record net buying of 695 billion yen in May. But they sold a net 51.6 billion yen in medium to long-term Japanese bonds in June, after being net buyers in May.
The total Chinese net buying of Japanese short-term and longer-term debt combined in 2010 comes to more than 1.7 trillion yen, well over the annual record of 255 billion reached in 2005. The recent surge in Japanese bond investment by Chinese investors has stirred some talk China may be diversifying its foreign reserves into the yen, and away from the euro and the US dollar.
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