China increased its holdings of U.S. treasuries in February by $8.7 billion, or 0.7%, boosting its total positions to $1.223 trillion, according to data from the U.S. Treasury department released today.

It means 36% of China's massive $3.4 trillion total foreign reserves pool is now in ultra-low yielding U.S. treasuries. The benchmark 10-year treasury yield is around 0.1% percentage in February, and has been mostly moving below 2% during the past 12 months.

On the other hand, the U.S. registered an inflation rate of 1.7% in 2012 and 3% in 2011. Even though the U.S. Federal Reserve anticipates that inflation over the medium term likely will run at or below its 2 percent objective, nearly 40% of China's huge foreign reserves are still potentially losing value everyday.

China is the largest foreign holder to U.S. government debt, and Japan is the second largest, with $1.097 trillion in total holdings. Japan has decreased its U.S. treasury holdings by $34.8 billion since last October.

Visit ChinaMoneyNetwork.com for more great China Money Podcast audio and video Internet episodes covering important investment news and financial events in China, as well as daily news updates on important China business news happenings. Follow us on Twitter @chinamoneypod subscribe to all episodes on iTunes.