China, the biggest buyer of United States Treasury securities, boosted its holdings for the third straight month, the US Treasury Department reported yesterday.

China's holdings of Treasury debt rose to US$883.5 billion in September, the department said in a report. That's a 1.7 percent increase from August. For much of this year, China has been increasing its holdings of Treasury debt.

The report shows that China and other countries still have a robust appetite for Treasury debt even as the US government is running annual budget deficits topping US$1 trillion. Overall, foreign governments boosted their purchases of Treasury securities by US$39.5 billion in September, a record high. A sustained drop in foreign demand for Treasury debt could lead to higher US interest rates, slowing the economy.

Japan, the second-largest holder, expanded its portfolio of Treasury debt to US$865 billion, a 3.4 percent increase from August. Britain, the third-biggest holder, boosted its stake to US$459.1 billion, a 2.1 percent rise.

Total holdings of Treasury securities by all countries rose to US$4.2 trillion in September, a gain of 1.3 percent from August. Of that total, US$2.8 trillion is held by foreign governments and central banks.

The report also showed that foreign governments and central banks cut their holdings of Fannie Mae and Freddie Mac bonds for the third straight month.

Those holdings were cut by a record US$31.4 billion in September. The previous record monthly cut was US$16.5 billion in October 2008.