China remains largest foreign buyer of US Treasury bonds

China's holdings of US Treasury bonds in September hit their lowest in a year, but the country remained the largest foreign buyer of US government debt, statistics released Friday by US Department of the Treasury showed.

China's holdings of US Treasuries totaled US$1.151 trillion in September, down by US$13.7 billion from the previous month.

The statistics also showed that Japan, the second largest foreign buyer, is a net seller of US treasuries in September, too, with its holdings slipping from US$1.03 trillion to a one-year low of US$1.028 trillion.

The data represented aggregation of purchases and sales by both foreign official institutions and private investors. Together, US Treasuries saw a net foreign outflow of US$29.1 billion in September.

Of that, net foreign private inflows were US$23.5 billion and net foreign official outflows were US$52.7 billion, meaning that the foreign private sector remained a net buyer while foreign official institutions contributed more to the selling activity.

Washington has increased the issuance of its government bonds since the massive corporate tax cut was enacted last December. Business insiders have warned of imbalance between demand and supply.

"I think we have a supply-demand problem for bonds that will particularly come next year or the year after," said Ray Dalio, founder of the world's largest hedge fund company Bridgewater Associates.

"In other words, because of that tax cut and the deficit, we'll have to sell a lot more bonds, and the United States itself can't absorb that quantity of bonds," he told CNBC in an interview on Thursday.