How Much U.S. Public Debt Does China Hold?
The bottom areas on the top chart shows the month-over-month annual change U.S. public debt, both the total value and that held by foreigners. That means each point is the change in the debt level from the same month a year prior.
Get DT Cochrane’s stories in your inbox
Join Medium for free to get updates from this writer.
From 2004 until August, 2008, it was growing annually by an average $569 billion. This was equal to about half a percent a month. Then, the government’s response to the global financial crisis saw that double and then triple and then almost quadruple. Foreign purchases of U.S. debt were an important component of that and the foreign-held share increased substantially.
China was the largest single foreign buyer of the U.S. debt. The U.S. debt level grew 52 percent from August 2008 until August 2011. Foreign buyers were responsible for 41 percent of that increase. Of the foreign purchases, China claimed 34 percent. China’s share of U.S. debt was already increasing before the growth rate of the U.S. debt level increased. However, the pace of the increase quickened. At the same time, Japan’s share, which had been decreasing, levelled off.
Eventually, the increase in U.S. debt slowed and, in late-2015, early-2016, foreign holdings even declined slightly. Then, through 2016 the growth in U.S. debt increased substantially again while the increase in foreign holdings grew much less and then saw significant declines.
Between June 2016 and June 2017, foreign holdings decreased by $109.8 billion. China was responsible for 86 percent of the drop. As of June 2017, China holds 5.8 percent of the U.S. public debt, just a bit more than Japan’s 5.5 percent.
