This article profiles central bankers in Japan and China. A couple of important points: the majority of Japanese dollar holdings are in US Treasury debt: $720B out of $812B, whereas the PBOC only holds $180B of its $600B in dollar reserves in Treasurys, with the rest in agency debt (Fannie, Freddie), mortgage backed securities, etc. China views its dollar reserves as a component of national wealth, so has been managing it for return, not just as a strategic instrument of trade, which explains the greater diversification.
...In Beijing these days, one of the fastest-growing fortunes the world has ever seen is managed by fewer than two dozen traders, chosen for showing mathematical brilliance at China's top universities.
...In contrast to Japan, China's money managers, while selling little of their existing Treasury holding, have not been buying much more. China's foreign currency reserves rose by $111.3 billion in the first three quarters of the year, according to official Chinese data. But its Treasury holdings, American filings show, climbed by only $16.4 billion.
Instead, officials at the State Administration of Foreign Exchange in Beijing have been seeking higher yields by plowing billions of dollars a month into bonds backed by mortgages on houses across the United States, according to bankers who help Beijing manage the money. By helping keep mortgage rates from rising, China has come to play an enormous and little-noticed role in sustaining the American housing boom.
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