According to statistics released by US Treasury on September 17, China held $518.7 billion worth of US treasury bonds in July, $14.9 billion more than in June.
The growth in US bonds held by China was the second peak since this January, with China placed as the second largest holder of US treasuries.
The data showed that Japan remains the largest holder, increasing its bonds by $9.6 billion in July to $593.4 billion. The UK is the third largest with $290.8 billion.
The US subprime mortgage crisis has made dollar-denominated investment products less attractive to foreign investors. Net purchases of long-term US securities totaled $53.4 billion in June, far less than the revised value of $83.2 billion in the previous month.
However, the situation was eased in July by several countries increasing their holdings of US treasury bonds, except Luxembourg, whose holdings decreased $12.8 billion.
China's increasing US holdings had a connection to the growing foreign exchange reserves in July, said professor Ding Zhijie from the University of International Business and Economics.
Moreover, he said turmoil on Wall Street triggered by the Lehman Brothers' bankruptcy would not lead other countries to cut US treasury holdings in the future because the US dollar keeps strengthening recently.