Japan overtook China as the top foreign holder of U.S. government debt for the first time since the global financial crisis, a sign of economic and policy shifts in Asia’s two largest economies.

Japan’s ownership of Treasuries fell by US$14.2 billion, to $1.2244 trillion, in February, according to Treasury Department data released Wednesday in Washington. China’s holdings were $1.2237 trillion as of February, $15.4 billion lower than a month earlier.

The reversal reflects the diverging paths of the two countries’ currencies, with Japan embarking on record asset purchases that have weakened the yen 27 percent since 2012, and China seeking to avoid having the yuan decline too much against the dollar as the nation’s economy slows. China’s Treasury holdings had overtaken Japan’s in 2008 as the U.S. ramped up borrowing during the financial crisis.

“With the weakness in the currency and the potential outflows, there’s less need or opportunity for the Chinese to accumulate dollar reserves,” Win Thin, the global head of emerging-market strategy at Brown Brothers Harriman & Co. in New York, said before the Treasury report.

Japan’s holdings of Treasuries increased $13.6 billion from a year earlier, while China’s declined $49.2 billion.

China’s foreign-exchange reserves slid the most on record in the past three months, data from the nation showed Tuesday, fueling speculation the central bank sold holdings to support the yuan as money flowed out. The reserves dropped $113 billion to $3.73 trillion, the third straight quarterly decline.

China and Japan account for about two-fifths of all foreign ownership of Treasuries, which dropped $56.6 billion in February to $6.16 trillion, the figures showed. Of that total, $4.09 trillion were government holdings.

From a geopolitical perspective, there may be some preference among U.S. policy makers to have Japan as the country’s largest foreign creditor, given the diplomatic differences that color many aspects of relations between the U.S. and China.

“If you have a nation that has the potential to be an adversary at some point, does that pose a risk?” Gary Pollack, who manages $12 billion as head of fixed-income trading at Deutsche Bank AG’s private wealth management unit in New York, said before the report. U.S. officials may prefer that their largest creditor not be “a country that may not be fully aligned with them from a geopolitical point of view.”

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