China Owns Nearly $270 Billion More In US Debt Than Previously Estimated

Earlier in the year, the US Treasury Department released their data for the largest foreign holders of US debt as of December, 2010.

At the time, the top three looked like this:

China - $891.6 billion
Japan - $883.6 billion
United Kingdom - $541.3 billion

The United Kingdom stuck out on this list like a sore thumb due to the fact that their holdings of US debt had more than TRIPLED over the course of just 12 months.

Many speculated that it wasn't actually the United Kingdom that was snapping up all of this debt. Instead, it was widely thought that China was carrying out the majority of these purchases through UK-based money managers. If Chinese investors were, in fact, buying through UK-based money managers, then the transactions would have been temporarily counted as belonging to the United Kingdom and not China.

Earlier today, the Treasury Department revealed that China had, in fact, been purchasing hundreds of billions of dollars of US debt through money managers in the United Kingdom. The Treasury Department re-allocated the debt amounts to their proper owners and re-released a very different looking list of the largest foreign holders of US debt. The top three now looks like this:

China - $1.16 trillion
Japan - $882.3 billion
United Kingdom - $272.1 billion

In total, roughly $270 billion worth of US debt was switched from the UK to China. According to the US Treasury Department, China now owns a staggering $1.16 trillion in US debt. This means that of the $4.44 trillion of US debt that is currently in the hands of foreign holders, China owns 26.1%.

Source: Largest Foreign Holders of US Debt

Filed under: General Knowledge