China cuts U.S. Treasuries holdings for fifth month

China's holdings of U.S. government bonds fell for the fifth consecutive month in January, showed data released by the U.S. Treasury Department on Monday.

China, the largest foreign holder of the Treasuries, cut its holdings by 5.2 billion U.S. dollars to 1.2391 trillion dollars in January. Japan, the second largest holder, raised its holdings of U.S. Treasury bonds by 7.7 billion dollars to 1.2386 trillion dollars. Japan last surpassed China as top holder of the U.S. Treasuries in 2008.

China's capital account deficit widened sharply in the last quarter of 2014 to 91.2 billion dollars, compared with the third quarter's 9 billion dollars. The widening deficit fanned concerns about massive capital outflows from the country as economic growth slowed.

As China gradually moves to make its foreign exchange mechanism more market-oriented, the structure of "trade surplus and capital outflow" will become increasingly normal, China's State Administration of Foreign Exchange (SAFE) said in a report.

Some economists say, China's appetite for buying dollar assets has reduced along with the country's scaling back of its intervention in foreign exchange markets.

The SAFE reiterated the capital outflow remains "moderate and within the limit" and that the liquidity in the foreign exchange market remains "ample." Endite