China cuts back on US debt for 5th month in a row

Tuesday, March 17, 2015
By Paul Martin

RT.com
March 17, 2015

China, the largest holder of US debt, has continued to cut back on US Treasuries for the fifth consecutive month, shaving $5.2 billion from its holdings between December and January. Japan is edging closer in overtaking the number one spot.

The US Treasury reported Monday that China reduced its holding from $1.244 trillion in December to $1.239 trillion in January. The fifth straight month of reductions.

Economic growth in China, which is at a 25-year low, is the most obvious explanation for the scale back. With more capital leaving mainland China, the less the government needs US dollars to keep the yuan in check.

In total, foreign central banks sold off $12.3 billion in US Treasuries in January, the fourth consecutive month of outflow.

Despite China’s pull out, overall foreign holdings increased one percent to $6.22 trillion, or just over 34 percent of total public debt. Among all foreign creditors, China and Japan own about 40 percent of US Treasuries.

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