Foreign holdings of U.S. Treasury securities rose in December to a record high despite cutbacks by China and Japan, the two biggest foreign owners of Treasury debt.

China’s holdings fell to a 10-month low, a government report showed in Washington, as the world’s second-largest economy reduced foreign-exchange reserves to support a weakening yuan.

The biggest foreign holder of U.S. government debt had $1.25 trillion in bonds, notes and bills in December, down $18.4 billion from a month earlier and little changed from a year earlier, according to U.S. Treasury Department data released this week. The portfolio of Japan, the largest holder after China, dropped $22.4 billion to $1.12 trillion, the data showed.
 
Foreign ownership of Treasury securities increased 0.7 percent in December to a fresh record of $6.17 trillion, up from $6.13 trillion in November, the Treasury Department reported Tuesday. Official holdings, which include central banks, fell by $27.2 billion to $4.1 trillion, it showed.

The declines were offset by Caribbean banking centers such as the Bahamas and the Cayman Islands, which boosted their holdings by 4.5 percent to $351.6 billion. Ireland and Switzerland also expanded their holdings.

The national debt now stands at a record $19 trillion. Of that amount, $13.7 trillion is publicly traded on financial markets and $5.3 trillion is debt that the government owes itself in the form of holdings in trust funds such as the Social Security trust fund.

Foreigners own about two-fifths of the debt that is publicly traded. Of that amount, $4.1 trillion is held by foreign governments, primarily central banks, who see Treasury securities as one of the world's safest investments.

For many central banks, selling U.S. Treasurys gives them the cash to prop up their collapsing currencies, CNNMoney reports.

"These interventions are trying to add some air to the parachute," Win Thin, head of emerging market currency strategy at Brown Brothers Harriman, told CNN.

"In total, central banks sold off a net $225 billion in U.S. Treasury debt last year, the most since at least 1978, the last year of available data. In 2014, there was a net increase of $45 billion," according to CNNMoney's analysis of Treasury data published this week.

Foreign governments sold more U.S. Treasurys than they bought in 11 out of 12 months last year, according to Treasury data.

After years of building up savings, countries are starting to sell off their reserves. These countries seized the boom as a chance to ramp up their foreign reserves by buying hundreds of billions of debt issued by the U.S. Treasury. Former Fed Chair Ben Bernanke in 2005 called it the "global savings glut."

Now, central banks are scrambling to prevent their currencies from plummeting even further. The U.S. debt selloff could be a trend for some time, expert say.

"I would expect that we would see this trend continue this year and perhaps into 2017," says Gus Faucher, senior economist at PNC Financial.

While China and Japan dumped U.S. debt, other countries, including France, India, Canada and Ireland, increased their holdings.

Leading the pack was France whose holdings rose by $21.5 billion in December. Private investors in Asia and Europe also helped keep a lid on U.S. yields, snapping up U.S. bonds over lower-yielding high-quality government bonds in Japan and Europe, The Wall Street Journal reported.

China’s cut came as little surprise as data last month showed its foreign reserves tumbled by $107.9 billion in December, the biggest monthly decline on record amid capital outflow and negative wagers on the Chinese currency, the WSJ reported.

China has been selling Treasury debt since the summer of 2015 and used the proceeds to stabilize the Chinese yuan. China surprised the world in August by devaluing the yuan but has since taken actions aimed at preventing the currency from weakening.

The problem for the U.S. Treasury bond market is whether private sector investors continue to fill the gap left by official institution, said Priya Misra, head of global rates strategy at TD Securities. “This is the question for investors in the longer term,” especially as appetites of private investors tend to be more fickle compared to those from central banks, she told the WSJ.

In the budget President Obama recently released, his administration projected that annual budget deficits over the next decade will total $6.1 trillion. The Congressional Budget Office projects even larger deficits over the next decade, totaling $9.4 trillion, as the retirement of the baby boomers forces the government to spend rising amounts of benefit programs such as Social Security and Medicare.

Projected deficits of that size have raised concerns that Washington policymakers will soon need to take action to either raise taxes or cut government spending to keep the deficits at a manageable size that will not outstrip demand in financial markets.

(Newsmax wire services contributed to this report).