China is no longer the United States’ biggest overseas creditor according to CNNMoney. Japan now holds the title.
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 down.
China’s large holding of U.S. debt fell to $1.12 trillion at the end of October. That is their lowest in six years according to the U.S. Treasury Department. Japan held $1.13 trillion.
Both countries offloaded Treasuries during the month, but China dumped far more.
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 this 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 State “a lot of power” over China.
Yet the biggest single holder of U.S. debt remains the Federal Reserve. During the last county they had $2.5 trillion.