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Thread: China is no longer the biggest foreign holder of U.S. debt

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    Veteran Member Jehan's Avatar
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    Default China is no longer the biggest foreign holder of U.S. debt


    China has lost its crown as the United States' biggest overseas creditor. That title now belongs to Japan.


    http://money.cnn.com/2016/12/16/inve...bt-treasuries/


    Beijing has been dumping U.S. government debt to prop up its currency. China uses the dollars it gets from selling U.S. Treasuries to buy the yuan, which has sunk to an 8-year low as the world's second largest economy slows.

    China's huge holdings of U.S. debt fell to $1.12 trillion at the end of October, their lowest level in more than six years, according to U.S. Treasury Department data. Japan held $1.13 trillion.

    Both countries offloaded Treasuries during the month, but China dumped far more: its holdings dropped by $41.3 billion, while Japan's fell by just $4.5 billion.

    Related: Trump attacks China on trade but misses the mark

    China's willingness to lend vast sums to the U.S. government has drawn a lot of attention in recent years. Since September 2008, the Treasury Department has ranked it as the biggest foreign creditor to the U.S., with the exception of one month in early 2015 and again with its latest update.

    The situation has raised concerns about Beijing's leverage over the United States. President-elect Donald Trump has claimed the opposite, suggesting it gives the United States "a lot of power" over China.

    Experts say the reality is more complicated, arguing that the debt relationship binds the world's two largest economies closely together. Trump has suggested he will take a more confrontational stance toward China on trade, threatening to slap tariffs of as much as 45% on Chinese goods.

    Related: 8 reasons why starting a trade war with China is a bad idea

    For years, China spent trillions of yuan buying Treasuries as a way of stopping its currency from getting too strong even as its economy grew rapidly. That made China's exports more competitive, but it also helped to keep interest rates in the U.S. lower than they would have been.


    It seems that China economy is far less solid that everybody expect.

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    Veteran Member Apricity Funding Member
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    Yeah, the Chinese economy has mostly grown through real estate and manufacturing cheap goods. When it comes to finance and R&D it is still far from developed.

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    Veteran Member Jehan's Avatar
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    Quote Originally Posted by Tooting Carmen View Post
    Yeah, the Chinese economy has mostly grown through real estate and manufacturing cheap goods. When it comes to finance and R&D it is still far from developed.
    Zayoun (I don't remember how spell his nickname sorry) has made some posts about technologic hub in the south of China. It seems there are some hight technologic firm in China but of course in proportion to the size of the country it represents absolutly nothing in the economy.

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