Japan Only $50 Billion Behind China

It seems to be just a matter of time before Japan reclaims the title of being the USA's largest foreign creditor.

According to the US Treasury Department, China's holdings of US debt increased 0.61% to $1.2709 trillion in May, while Japan's holdings increased 0.86% to $1.2201 trillion.

Over the past 12 months, China's holdings of US debt have decreased by 2.03%, while Japan's holdings have increased by over 10%.

China, which had, in previous years, snapped up as much US debt as they possibly could, has tapered off their purchases in recent months. Thankfully for the United States, countries such as Japan, Belgium and the Caribbean Banking Centers have stepped up and bought heavily over the past year.

Speaking of Belgium, their holdings of US debt have skyrocketed by over 106% to $362.4 billion in the past 12 months. According to multiple media reports, this is likely the result of some country buying US debt through Belgium's banking centers. It's unlikely that Belgium itself has purchased that much debt over the past year.

Here were the five largest holders of US debt as of May 2014:

China, $1.2709 trillion
Japan, $1.2201 trillion
Belgium, $362.4 billion
Caribbean Banking Centers, $310.8 billion
Oil Exporters, $257.9 billion

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There was a time when Japan was the USA's largest creditor, and it wasn't even really close. Over the past 15 years or so, China has purchased an enormous amount of US debt as their fortunes have improved. For the past number of years, China has been the United States' largest creditor.

If the current trend continues, however, Japan will once again reign supreme as America's largest foreign creditor.

Source: Largest Foreign Holders of US Debt

Filed under: General Knowledge