China sharply expanded investments in Japanese government bonds in the first months of this year, apparently to increase exposure to stable Japanese vehicles against the backdrop of the European debt crisis, data from the Finance Ministry and other sources showed Saturday.
While welcoming the interest from deep-pocketed China, which sits on rapidly growing foreign currency reserves, Japanese officials remain guarded about the country's intentions, fearing that the sharp expansion in investments may turn out to be a temporary shift to "safe" instruments.
According to the Finance Ministry, China purchased ¥1.28 trillion more Japanese securities than it sold in the January-May period this year.