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China cuts American debt holdings
By Christopher S. Rugaber |
February 16, 2011, Wednesday
|
Print Edition
Print Edition
CHINA, the biggest buyer of United States Treasury securities, reduced its holdings in December for the second straight month.
China's holdings of Treasury debt fell 0.4 percent to US$892 billion, the US Treasury Department said yesterday. The declines followed four months of increases. China's ownership of US government debt is slightly below the US$895 billion it held a year ago.
Overall, foreign holdings of Treasury securities rose 0.6 percent to US$4.37 trillion. Britain and Japan ramped up their purchases of US government debt in December. That suggests overseas governments and private investors are still willing to buy US government debt.
The US government is selling huge amounts of debt to finance record-high deficits. This year's deficit is forecast to reach US$1.65 trillion this year, the highest ever. Last year the government posted a US$1.3 trillion deficit.
Overseas demand for the debt helps lower the interest rate the US government pays on its debt. If the US had to finance its debt through US investors alone, the government would have to pay higher rates. American companies and consumers would also pay higher rates.
Japan, the second-largest buyer of US debt, boosted its holdings 0.7 percent to US$883.6 billion.
China's holdings of Treasury debt fell 0.4 percent to US$892 billion, the US Treasury Department said yesterday. The declines followed four months of increases. China's ownership of US government debt is slightly below the US$895 billion it held a year ago.
Overall, foreign holdings of Treasury securities rose 0.6 percent to US$4.37 trillion. Britain and Japan ramped up their purchases of US government debt in December. That suggests overseas governments and private investors are still willing to buy US government debt.
The US government is selling huge amounts of debt to finance record-high deficits. This year's deficit is forecast to reach US$1.65 trillion this year, the highest ever. Last year the government posted a US$1.3 trillion deficit.
Overseas demand for the debt helps lower the interest rate the US government pays on its debt. If the US had to finance its debt through US investors alone, the government would have to pay higher rates. American companies and consumers would also pay higher rates.
Japan, the second-largest buyer of US debt, boosted its holdings 0.7 percent to US$883.6 billion.
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