It was quite unexpected that the U.S. Treasury Department suddenly announced to the world that China had increased its holdings of U.S. Treasury bonds by $34.3 billion.

It has to be said that during this long holiday period, the U.S. side released several economic data points, all of which were surprising.

The U.S. Treasury Department published a TIC report, which detailed the holdings of U.S. Treasury bonds by various countries as of December last year, as well as the inflow of overseas funds into various types of U.S. securities in December last year.

This report is published monthly, but the reason why this time was surprising, perhaps even the Americans did not expect it, is that China's holdings of U.S. Treasury bonds increased significantly by $34.3 billion, returning to over $800 billion.

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U.S. Treasury Secretary Yellen has always been worried about the U.S. Treasury bond crisis, fearing that the bonds would not be issued, fearing that the interest cost of the bonds would become increasingly high, and also worrying that overseas countries including China would continue to sell U.S. Treasury bonds.

This time, when she saw the data showing that countries including China, the United Kingdom, Japan, and many others are simultaneously increasing their holdings of U.S. Treasury bonds, would she breathe a sigh of relief?

However, in fact, if one understands the true meaning behind these data, perhaps Yellen would be even more worried.

Firstly, China's increase may not necessarily be a real increase.

Let's do a simple math problem: in October last year, our holdings of U.S. Treasury bonds dropped to $769.6 billion, and by December of the same year, our holdings of U.S. Treasury bonds increased again to $816.3 billion, an increase of $46.7 billion over two months, equivalent to a 6.068% increase.

Did we really buy $46.7 billion? Not necessarily.U.S. Treasury bonds encompass a variety of maturities, but the ten-year Treasury note is known as the anchor of global asset pricing. Its price and yield affect other U.S. Treasury bonds.

Let's examine the price changes of the ten-year U.S. Treasury note from November to December last year. The closing price at the end of October was 105.875, and the closing price in December was 112.687. This means that from November to December last year, the ten-year U.S. Treasury note rose by 6.434%.

The price of the ten-year U.S. Treasury note increased by 6.434%, while China's holdings increased by 6.068%. This might suggest that the increase in our holdings of U.S. Treasury notes is likely due in large part to the rebound in their prices. This is a passive phenomenon, not an active purchase by us.

Or, even if we did make active purchases, the volume bought was very small.

Let's look at it from another perspective: throughout 2023, the price of the ten-year U.S. Treasury note fell by 2.73%, but China's holdings of U.S. Treasury notes decreased by 5.86% for the entire year. This shows that the reduction in our holdings of U.S. Treasury notes is much greater than the price drop of the notes.

Yellen likely has more data at her disposal, and she should be more aware of whether China has been buying U.S. Treasury notes and how much has been purchased.

Perhaps she is still concerned but unwilling to discuss more truths, at least the surface data can make more investors willing to buy U.S. Treasury notes.

Regarding our holdings of U.S. Treasury notes, there is a second point that needs to be highlighted.

In fact, the increase in our holdings by $34.3 billion in December alone might seem substantial, as it is calculated in U.S. dollars.

However, when viewed against the current total amount of U.S. Treasury notes, which exceeds $34 trillion, this is only one-thousandth.Currently, the total amount of U.S. Treasuries held by foreign investors is 80.561 trillion. In the context of this figure, our increase of 34.3 billion is not even a rounding error and is almost negligible.

However, we use such a small increase to remind the United States that we can buy U.S. Treasuries, and the key is the attitude of the United States. Last year, our country's trade surplus in goods was as high as 4,279.4 billion yuan, and even if we buy a little U.S. debt, the actual proportion is not significant.

Recently, the relationship between China and the United States has eased slightly, and we do not mind sending a signal of goodwill to the U.S. side, but we also look forward to reciprocation from the U.S. side.

I believe Yellen is also very clear about this point.