China has been partly responsible for the surge in sales of Japanese government bonds over the past five weeks, as it looks to diversify its foreign exchange holdings following falls in US bond yields, Reuters reported. Foreigners bought US$57.7 billion worth of Japanese bonds in the five weeks to May 20, a record amount since Japan began to compile the data in 2005. A large part of the buying was made through Chinese banks in London, market sources said, so the official breakdown of investors by country is likely to understate China’s purchases. Market players say China may not stay long in the market: Purchases have focused on long-dated notes with less than one year to maturity. China’s forex reserves had ballooned to more than US$3 trillion by the end of March. The yield on US bills began to fall in April, and had sunk to 0.01% for US three-month T-bills by early May.