Is China Hiding Its Purchases of Treasuries?

Floyd Norris shares a report by Hong Komg based, Keith Bradsher:

Economists here are not entirely convinced that Chinese purchases of Treasuries have declined. The Chinese government has long purchased a lot of bonds through street names in Britain. They have a particular incentive to do so now because of growing concerns in China about the safety of Treasuries. So some analysts guesstimate the monthly change in Chinese holdings by adding the changes in Chinese and British reserves (yes, other countries also use Britain, but the scale of their operations is much smaller). Sure enough, British holdings skyrocketed in June, climbing more than $50 billion, or 30.6 percent, in June alone.

If anything, the Chinese have an even bigger problem now with currency inflows as their economy strengthens and speculative inflows resume. The Chinese stimulus partly consists of still intervening heavily in currency markets to hold down the renminbi and stimulate exports, and part of the proceeds of that intervention go into Treasuries.

It is entirely possible this is going on. If it is, it means two things. The Chinese are making a grave mistake in propping up the dollar. It will ultimately mean huge inflation in China. Secondly, if the Chinese can somewhat hide purchases, it also means they can somewhat hide sales, when they do start selling.