China’s Holdings of US Treasuries Hit Five Month High in March

The latest official data from the US Treasury Department indicates that China’s holdings of US Treasury Bonds tapped a five month high in the month of March.

Figures just released by the Treasury International Capital system indicate that in March China’s holdings of US Treasuries rose by USD$11 billion, to $1.19 trillion, further cementing its position as America’s biggest creditor amidst escalating trade tensions between the two countries.

The scope of increase in March also exceeded the on-month increase in February, which was then the largest in six months.

In sharp contrast Japan saw its holdings of US government debt fall by $16 billion in March to $1.04 trillion, hitting its lowest level since October 2011. Japan remains the second largest holder of US Treasuries after China.

China’s enduring status as the biggest creditor of the US has led to speculation as to whether it could use its debt holdings in negotiations with Washington amidst heightened trade tensions.

In 2017 China increased its holdings of US debt by $126.5 billion, for the largest increase since 2010. The State Administration of Foreign Exchange has consistently denied rumours that have circulated since the start of 2018 that China plans on reducing its holdings of US debt.

 

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