China Now Largest Foreign Creditor Of United States
Creditors have better memories than debtors.
-Benjamin Franklin, Poor Richard’s Almanac (1758)
The term “who’s your daddy?” came to mind when I read the following from the Sydney Morning Herald (Australia) yesterday:
China is now officially the US government’s largest foreign creditor after overtaking Japan, in a development that signals Washington’s increasing reliance on Beijing to save its economy.
China became the largest foreign holder of US Treasuries, owning $US585 billion ($A897.1 billion) worth as of September, according to US Treasury Department figures.
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The Herald staff noted that China continues to buy more Treasuries. From the piece:
China’s ever-growing trade surplus, a major source of its massive foreign exchange reserves that is mostly made up of US dollar assets including Treasuries, hit a monthly all-time high of $US35.2 billion ($A53.98 billion) in October.
Throughout the third quarter, China piled more than $US81.1 billion ($A124.37 billion) into Treasuries – the safest US assets it could find – while dumping bonds from government-affiliated agencies, such as Fannie Mae and Freddie Mac, said Brad Setser, an economist at the Washington-based Council on Foreign Relations.
That contrasted with the second quarter when China bought only $US13 billion ($A19.94 billion) of Treasuries while buying $US17 billion ($A26.07 billion) in agency bonds and $US20 billion ($A30.67 billion) of corporate bonds.
Methinks Washington will try not to anger China anytime soon…
Source:
“China tops US govt foreign creditor list”
Sydney Morning Herald, November 19, 2008
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