By contrast, the US reduced its holdings of Japanese treasury bonds last year by 15 percent to 8.6 trillion yen, while the UK, the largest European creditor of Japan, reduced its holdings by 23 percent to 8.87 trillion yen, according to the BOJ data.
"As the total amount of China's foreign reserves has increased quickly, it was reasonable that China increased its holdings (of Japan's treasury bonds) last year amid concerns about the EU debt crisis and the weakening US economy," Zhao Xijun, deputy director of the Finance and Securities Research Institute at Renmin University of China, told the Global Times Tuesday.
"As the largest holder of US treasury bonds, China also needs to diversify its portfolio to balance its foreign exchange reserves investments," Zhao noted.
China's foreign reserves hit $3.31 trillion by the end of 2012, up 4 percent compared with the previous year, according to the People's Bank of China. And the number had risen to $3.44 trillion by the end of the first quarter this year.
Compared with other foreign investment products, "Japanese treasury bonds have always had a relatively stable yield as most of the holders are domestic investors, and the government is unlikely to allow big potential risks," Zhao noted.
The benchmark 10-year yield for Japanese treasury bonds rose to 0.905 percent Tuesday, up 7 basis points from the previous day.
China started to raise its reserves of Japanese treasury bonds substantially in 2011, when its holdings hit a record high of 18 trillion Japanese yen, up 71 percent from the previous year.
Liu Dongliang, a senior analyst at China Merchants Bank, told the Global Times Tuesday that Japanese treasury bonds are still a good investment target due to the lower risk involved, although the recent depreciation of the yen may cause losses for its foreign holders.
Japanese Prime Minister Shinzo Abe has released a series of quantitative easing policies since he took office last December, and has promised to promote further yen depreciation to stimulate the world's third largest economy.
Zhao said the fall in the yen has not only hurt China's interests but also those of other countries like the US, which is unlikely to allow the yen to depreciate continuously in the long term.
Depreciation in the yen has greatly affected China's exports to Japan, even if the country's quantitative easing measures have been effective in aiding the recovery of its domestic economy, Ministry of Commerce spokesman Shen Danyang said on May 16.