China held $230b in Japanese govt bonds in 2011

China's holdings of Japanese government bonds, including short-term government bonds, amounted to approximately 18 trillion yen ($230 billion) at the end of last year, an increase of 71 percent year-on-year, according to Japan's Ministry of Finance and the Bank of Japan.

Analysts said part of the Chinese government's dollar reserves had been transferred to the yen.

China's holdings of Japanese government bonds have grown rapidly since 2009. It became the largest holder of Japanese government bonds in 2010, surpassing the United States and the United Kingdom.

By the end of last year, the amount of Japanese government bonds held by foreign institutions and individuals totaled 92 trillion yen, up 27 percent year-on-year.

Analysts said the structural appreciation of the yen is the main reason behind the capital inflows.

This March, Japan was allowed to buy up to 65 billion yuan ($10.3 billion) of Chinese government bonds.

Last week, China and Japan began direct trading of the yen and the yuan. It is expected that holdings in each other's bonds will continue to grow.