How Badly Do We Need China to Buy Our Debt?
Clemens Kownatzki submits:
The Department of U.S. Treasury announced the revised numbers of major foreign holders of U.S. Debt in their most recent update. Based on the new data, China – not Japan – was indeed the number one holder of U.S. Treasuries holding a total $894.8 billion worth of US. Treasury securities at the end of December 2009. Japan in second place held a total of $765.7 billion, $129 billion less than China. See both data for current and previous data in the charts below.
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We have previously wondered what, if any, impact a decline in Chinese holdings of U.S. Treasuries would have. We also considered whether the recent hike in the discount rate would be some sort of a token gesture to the Chinese that potentially higher yields may be an incentive to keep buying those Treasuries.
