China reduces holdings in US debt

Source: BBC

China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.

China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC's Chris Hogg.

Japan and the UK - second and third largest holders of US debt - increased their holdings over the same period.

China's holding of US debt is about 7% higher than at the turn of the year.

Read more: http://news.bbc.co.uk/2/hi/business/8207174.stm

or pwned! actually

:-)

$ 150 billion every month?

It just seems like interest rates are going to have to rise substantially. We can't buy our own debt for long I wouldn't think.

I do expect interest rates to rise substantially during the next year. That's why my pittance of a 401K is staying in money market funds, and the hell out of the stock market.

Americans own a lot of our own debt.

I buy gov't securities...safest part of my investments overall.

maybe I should understand this but I don't!

that's how i understand it.

Iirc, in July the purchases went through the roof. Looks like it was a very brief slowdown that they more than made up for. Probably more a scheduling thing than an appetite for securities.

I'll look for some links too...

I was wrong about the dates. Those articles are saying that in June foreign purchases of US debt surged -- the month the OP says was lower.

I think that the BBC article about reductions and the other articles about increases are about offsetting or different transactions. The simplest explanation is that China dumped some of its "holdings" but purchased newly issued securities. That would make sense if they had purchased very low interest short term debt the Treasury was offering during the financial crisis, and turned around and purchased higher interest long term securities that the Treasury is now offering. Then again maybe China was dumping securities and the Treasury panicked and put out a happy news story. Hard to tell, but compare:


http://news.bbc.co.uk/2/hi/business/8207174.stm

China reduces holdings in US debt
Dollar notes
China wants to establish a new global currency regime

China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.



http://www.google.com/hostednews/afp/article/ALeqM5jkLPvWOBY92j4XQTNARw05LkU2xw

Foreign purchase of US securities surge

By P. Parameswaran (AFP) – 2 days ago

WASHINGTON — Foreign purchases of US long-term securities surged in June, reversing an outflow the previous month and signaling recovery of battered financial markets, new data showed Monday.

The jump was primarily driven by a sharp increase in overseas demand for long-term US Treasury securities, including from China, the biggest owner of American debt, according to the monthly US Treasury international capital report.

It said that net long-term security transactions in June climbed to 90.7 billion dollars from negative 19.4 billion dollars in May as both private and official foreign investors beefed up their portfolios.

The June figure was substantially higher than market expectations of 17.5 billion dollars.

Analysts said the fresh data underscored a recovery in financial markets reeling from a prolonged US recession and signaled that the underlying demand for US securities remained healthy.

"This provides further support to the view that financial markets are on the road back to normalcy," said Bodhi Ganguli, an economist at Moody's Economy.com.

over there?

Given China's quality, they're either very stupid or very deliberate. Never mind that, in a community, most people look for people who contribute and try to be worthy. Is China really contributing, especially after year after year of recalls, complaints, and everything else?

Economically speaking, of course.

If we refused to buy their cheap stuff, guess what. They wouldn't be able to sell it to us. (They must wonder who buys the stuff they send here.)

For a second there I thought you were going to drop an "all Chinese are very stupid" bomb - not a very progressive group stereotype. Fortunately, you did give the "or" of the poor quality of their goods being poor being "very deliberate" - which indeed it is. They've found someone to buy cheap stuff that they can make a profit on, so they very deliberately make it that way. When the market for it disappears, they'll change what they produce as the Japanese did.

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....I don't know why China is getting so excited, the US Treasury has plenty of ink and paper....