For years, the mainstream media reported that China was unloading Treasuries when in fact they weren't (Treasuries were purchased and listed as being held by the U.K., then regularly revised to China). BUT, recent revisions to the TIC Data shows that the slow down we witnessed in late 2011, was actually a rather significant decline.
The rise in holdings comes after China reduced its position in U.S. government debt in 2011 for the first time since the Treasury started releasing the data in 2001, as yields fell to record lows.
* Chinese + United Kingdom Holdings as some purchases flow through the U.K.
Some of this was simply a reallocation to higher yielding agency bonds, but it doesn't seem to account for that much of it. We'll see in coming months (data will now be revised by the Treasury on a monthly, rather than yearly basis) if the bottom holds at spring 2010 levels or if things are taking a much different turn in China than most market participants believe.