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Montevideo, September 25th 2018 - 15:59 UTC

Great China (Beijing, HK, Singapore, Taiwan) reducing holdings of US debt

Wednesday, October 19th 2011 - 16:33 UTC
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But US Treasuries holdings increased in UK, Switzerland and Japan  But US Treasuries holdings increased in UK, Switzerland and Japan

China has reduced its holdings of US debt to their lowest level in a year, after the US's credit rating was downgraded by Standard & Poor's (S&P). China sold 36.5bn dollars in US Treasuries or bonds to cut its holding to 1.137bn in August, latest data by the US Treasury Department showed.

In August, S&P cut the US's credit rating to double A+ from triple A over concerns about budget deficits. China is the largest foreign buyer of US government debt.

Other countries in the region such as Hong Kong, Taiwan and Singapore also reduced their holdings of US Treasuries in August.

However, the overall demand for US Treasuries increased in August amid rising global economic uncertainty.

The United Kingdom and Switzerland increased their holdings by almost 40bn dollars each, while Japan increased its investment by 21.8bn to 936.8bn dollars.

The have been concerns that the debt crisis in some European economies may hurt growth in the region. At the same time there are fears that recovery in the US, the world's biggest economy, may be faltering.

Analysts said the combination of these factors reduced the appetite for risk among investors, who have turned to traditional safe havens.

However analysts said the figures may not give a complete picture of China's Treasury holdings since Beijing buys some of its Treasuries through London and those figures do not show up immediately.

This is because in its initial estimates, the Treasury department attributes all purchases based on the country where they are made.

However, the revised data takes into account the origin of the buyers, as opposed to the location where the purchases were made. In 2010 the Treasury department revised up China's holdings by 268bn dollars when it published its revised figure.
 

Categories: Economy, International.

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