China Now Owns Over $900 Billion Worth of US Treasury Securities

China and Japan, who are the two largest foreign holders of US Treasury debt, continued to add to their already substantial holdings in April according to the US Treasury Department.

China decided to add another $5 billion, bringing their total holdings of US Treasury debt over the $900 billion mark. Japan was more aggressive in April, adding another $10.6 billion to bring their total holdings up to nearly $800 billion ($795.5 billion to be exact).

China and Japan now own a staggering $1.7 trillion of US Treasury securities combined, which is about 13% of all outstanding US debt.

According to the US Treasury department, total foreign holdings rose by $72.8 billion to $3.96 trillion in April.

Other countries/regions who have large holdings of US debt include:

Oil Exporters (Saudi Arabia, Iran, etc)
Caribbean Banking Centers (Bermuda, Cayman Islands, etc)
Brazil
United Kingdom

China and Japan’s voracious appetite for US debt in April was welcome news for the US government, as it helped to keep interest rates lower. With massive deficits (think trillions of dollars worth) stretching as far as the eye can see, continued interest in their Treasury securities from countries such as China and Japan is welcome news for the US government.

Why the sudden increase in interest from China and Japan after they appeared to be losing their appetites for US debt?

Simple. Europe.

Despite all of the problems that the United States has encountered over the past 2-3 years, US Treasury securities are still seen as the “world’s safest investment”. In times of duress, money will flood into debt offerings that are issued by the US government.

With all of the recent problems in Europe, countries like China and Japan are returning to the relative safety of US debt offerings, and away from Euro-denominated debt securities.

Throw in a reasonably stable US economy (relatively speaking anyways) and fairly strong US corporate earnings expectations, and you have a recipe for continued interest in US Treasury offerings.

Source: Associated Press - China And Other Countries Buy US Treasury Debt

Filed under: General Knowledge