China increased its holdings of US government debt by 0.5% to US$1.17 trillion in June, the third monthly increase in a row, even as other foreign investors shed their exposure to US Treasuries, Bloomberg reported. China’s larger purchases may have been driven by the country’s expanding trade surplus, which reached a two-year high of US$31.5 billion. “China continues to accumulate dollars as we continue to import from them and they have to do something with them, so they buy treasuries,” said Guy LeBas, head fixed-income strategiest at Janney Montgomer Scott. China’s buying composition suggested a changing preference for longer-dated securities over shorter-term bills, a reversal of recent trends. Meanwhile, foreign buyers were net sellers of US government debt for the month, shedding US$4.487 billion worth of US notes and bonds.