The beneficial aspect of this is that we can now move on from the "China as largest "creditor" to the U.S." to a more productive conversation regarding global economic recovery.
This article from China daily does have a more aggressive tone than previous PRC propaganda.
China's holdings of US Treasury debt slashed
By Li Jing (China Daily)
China sold $34b in bonds in Dec; Japan becomes biggest foreign holder
China drastically slashed its holdings of United States government debt last December, allowing Japan to retake its place as the largest foreign holder of US Treasury bonds.
China sold more than $34 billion in short- and long-term bonds, leaving its total holdings at $755.4 billion, according to US Treasury data released on Tuesday.
The country sold about $45 billion in US Treasuries in the last five months, Alan Ruskin, chief international strategist for RBS Securities Inc, said in a research note. He said it was a "long enough period to hint strongly at a trend".
Liu Yuhui, an economist with the Chinese Academy of Social Sciences (CASS), said now is a good time to cut holdings of US Treasuries as recent European debt concerns have driven up the US dollar.
"China has chosen the right strategy in slashing its huge holdings of US government debt as the greenback rebounds," said Liu, adding that there is no sign of change to the long-term weakness of the US dollar.
Massive US deficit spending and near-zero interest rates would also further erode the value of US bonds, said Cao Honghui, director of financial market research at CASS.
The White House released a budget plan on Feb 1 that predicted the deficit for this year would total a record $1.56 trillion, surpassing last year's $1.4 trillion, which re-ignited China's concern about its dollar assets.
As one of the US' biggest creditors, China has sought to diversify its portfolio of foreign exchange reserves over the past year as the share of US dollar-dominated assets is too large.