Japan tops China as largest holder of U.S. Treasury debt
Kyodo, AP Dec 16, 2016 The Japane Times
WASHINGTON – Japan surpassed China as the largest holder of U.S. Treasury securities in October for the first time in a year and eight months, according to U.S. government data released Thursday.
Japan’s holdings of U.S. Treasury debt totaled $1.1319 trillion as of the end of October, down $4.5 billion from a month earlier. The tally compared to China’s $1.1157 trillion, down $41.3 billion, the Treasury Department said.
The large reduction by China appears to reflect the country’s dollar-selling, yuan-buying interventions to shore up the value of the Chinese currency, also known as the renminbi, according to financial experts.
Meanwhile, Chinese central bank data earlier this month showed the country’s foreign exchange reserves shrank $69.1 billion in November from October to $3.0515 trillion, suggesting that Beijing may have further cut its U.S. bond holdings.
The reduction in November has sent China’s foreign currency reserves to their lowest level in five years and eight months.
The dollar has risen against other currencies since Republican business mogul Donald Trump won the U.S. presidential election Nov. 8. In Asian trading Thursday, the yuan was at its lowest level against the dollar in 8½ years.
Trump, who will take office Jan. 20, has pledged to stimulate the U.S. economy with tax cuts, deregulation and increased spending on infrastructure.
China had been the largest U.S. debt holder since Japan overtook it in February 2015 for the first time since August 2008.
In October, Ireland was in the third spot in terms of total holdings with $271 billion in Treasury debt followed by the Cayman Islands, a Caribbean banking center, with $262 billion in Treasury debt.
Total federal government debt now stands at $19.8 trillion and is projected by the Congressional Budget Office to increase by $8.6 trillion over the next decade, underscoring America’s need to keep attracting foreign investors.
