As of October 2019, the United States owes China roughly $1.1 trillion in Treasury securities, which ranks China as the largest foreign holder of US debt. This figure has fluctuated over time, but presently China controls around 8% of the total amount of foreign-held debt by the United States.
The second-largest foreign holder of US debt is Japan, which holds around 5.6% of the total amount of foreign-held debt.
China’s share of US debt has been slowly declining in recent years as other foreign countries have increased their holdings, although there was a spike in 2018. The decline is due to a combination of factors, including US Treasury security sales, foreign currency exchange rates, and diversification of US debt ownership by foreign countries.
The amount of US debt owed to China could rise if the country buys more Treasury securities or if the US begins to run a trade deficit with China, meaning it imports more goods from the country than it exports.
Similarly, the amount owed to China could decrease if the US runs a trade surplus with the country, meaning it exports more than it imports.
Overall, the US owes China roughly $1.1 trillion in Treasury securities as of October 2019.
Who does the US owe money too?
The United States of America currently owes money to a variety of entities, including the public, foreign and domestic governments, institutional and individual investors, as well as private businesses.
The majority of the debt is held by the public, which includes investors, individuals, as well as foreign and domestic governments. These individuals, investors, and governments purchase U.S. Treasury debt or securities, which the government then uses to finance federal government spending.
The federal government also borrows from other government accounts and entities, such as Social Security or the Federal Reserve. As of the end of 2020, the total amount of debt held by the public was almost $22 trillion.
A significant portion of the federal debt is held by foreign governments, with over $6.3 trillion held as of 2020. China is the largest holder of US debt with roughly $1.1 trillion, followed by Japan and Ireland, with about $1.02 trillion and $372 billion, respectively.
Other major holders of US debt include Luxembourg, Switzerland, Brazil, and the Cayman Islands.
Private investors, such as pension funds, mutual funds, and banks, also hold a significant portion of US debt. These investors purchase bonds, notes, and other securities to generate a return on their investments.
Debt is an important part of the US economy and helps to finance government spending and projects. While public, foreign, and private debt can help to stimulate economic activity, the significant levels of US debt can cause concern, particularly as a result of high budget deficits and the potential for future inflation.
Does US owe money to any country?
Yes, the United States does owe money to foreign countries. According to the U.S. Department of the Treasury, the United States’ total public debt outstanding is more than $22 trillion and about $6.2 trillion of it is owned by foreign countries, institutions, and investors.
Of that foreign-held debt, nearly $1.1 trillion is owned by Japan, and more than $1.07 trillion is owned by mainland China. Other countries that are major holders of U.S. debt include Ireland, Brazil, Luxembourg, and the United Kingdom.
In addition to the outstanding public debt, the U.S. also has a large backlog of obligations including Social Security, Medicare, and other federal programs. These obligations are considered debt, though they are not officially held by foreign countries.
The total of the publicly held debt, plus the backlog of obligations, is estimated to exceed $90 trillion dollars.
Is China trying to replace the U.S. dollar?
No, China does not appear to be attempting to replace the U.S. dollar as the world’s main reserve currency. China has been a particularly vocal critic of the U.S. dollar as a sole reserve currency, and its leadership has advocated for a more diversified reserve currency system.
However, China’s apparent aim is not necessarily replacing the dollar, but rather expanding the range of currencies used in international transactions.
This is why the Chinese government has made a concerted effort to encourage the use of the Chinese yuan internationally. In addition to engaging in currency swaps with foreign countries, China has also launched its own Interbank Foreign Exchange Market (IFEM).
This is a market designed to facilitate the yuan’s international usage, while also providing foreign countries with an alternative source of liquidity and reserves.
At the same time, China has also been increasing its gold reserves in an effort to provide an additional source of international liquidity. Ultimately, China seems to be attempting to create a multi-currency reserve system that would provide economic stability and security and could reduce the world’s reliance on the U.S. dollar.
In this sense, China does not want to necessarily replace the U.S. dollar, but instead create a more diversified, secure, and resilient system.
Can China call in U.S. debt?
No, China cannot call in U.S. debt. This is because when countries like China buy U.S. Treasury bonds, the bonds are legally binding contracts between the U.S. government and the buyer. As part of the contract, the U.S. government agrees to pay back the debt to the buyer at a predetermined time and interest rate.
The buyer does not have the power to call in the debt, as this would be a breach of contract. Furthermore, the U.S. government is not obligated to call in any debt, even if the buyer wishes to do so.
While China does have significant influence over the U.S. economy due to its large holdings of U.S. debt, it cannot unilaterally choose to call in the debt.
Which country owes the most money to China?
The answer to this question depends on what type of debt is being considered. According to data from the US Department of Treasury, the United States owes China the most in terms of the amount of Treasury securities owned by the Chinese government, totaling $1.1 trillion as of June 2020.
This debt is largely due to the U.S.’s fiscal policy of borrowing money to finance budget deficits over time.
However, when looking at total debt owed to China, the situation changes. According to the International Monetary Fund, Japan owes the most money to China in terms of total debt, at $2.2 trillion as of 2018.
This includes government debt, private debt, and debt owed by financial institutions and corporations. Other countries with large amounts of debt owed to China include Taiwan ($1.3 trillion), Germany ($1.2 trillion), the United Kingdom ($0.8 trillion), and South Korea ($0.7 trillion).
Which country has highest debt?
The country with the highest amount of public debt is Japan, which currently has a public debt exceeding 200% of its GDP. This reflects how the country has used public borrowing over the past several years in order to finance large stimulus packages and support its economy during the various recessions it has been through.
Japan’s public debt is also the highest among all advanced economies, with the United States coming in second with a public debt-to-GDP ratio of 107%. This is followed by Italy (132%), Greece (179%), and Portugal (132%).
These countries are not necessarily the countries with the largest amount of debt in absolute terms, as the United States is by far the largest debtor among all countries, with a total debt of $27.9 trillion in 2020.
India is the second-largest debtor country in terms of total debt, followed by France, China, and the United Kingdom.
What country is not in debt?
No country is completely free from debt; however, there are some countries that have very low levels of public debt. According to The Economist, the ten countries with the lowest levels of public debt in 2020 were Russia, Saudi Arabia, Brunei, Congo, Kuwait, The Bahamas, Macao SAR, Libya, Panama, and Liechtenstein.
These countries were all able to maintain low levels of public debt due to low government spending and strong fiscal policies. Additionally, the majority of them are resource-rich countries that have seen an influx of wealth due to their natural resources.
Thus, they are able to invest their resources financially into their countries and pay off their public debt faster.
What happens if China sells US debt?
If China were to sell US debt, it would have a significant impact on US debt markets and the economy as a whole. The US is one of China’s largest debt holders, and a sale of US debt by China would cause the prices of US debt to drop, leading to an increase in interest rates.
This increase in interest rates would push the cost of borrowing higher for both individuals and businesses. On the flip side, it would also put downward pressure on the US dollar, as the sale of US debt would mean a decrease in demand for the currency.
As China is one of the largest buyers of US Treasury securities, a sale of US debt by China would also mean a decrease in the confidence that investors have in US debt markets. Investors may view the US as a less reliable borrower in the future, resulting in a further decrease in demand for US Treasury securities.
This could also cause ratings agencies to revise the US’s credit rating downward.
Finally, a sale of US debt by China would likely negatively impact the US economy. If investors become less willing to buy US Treasury securities, then the US government would need to finance its huge deficit by other means, such as raising taxes or borrowing more from other countries.
This could have the effect of stifling economic growth, as the additional debt burden could make borrowers less willing or able to invest or purchase goods and services.
Is China in debt at all?
Yes, China is in debt. According to the most recent data released by China’s National Bureau of Statistics, the country’s total debt was 250.6 trillion yuan (approx. $36.2 trillion) in 2020, up 8.1% from a year earlier.
This represents an increase of 14.7% compared to 2018. This could translate to a debt to GDP ratio nearing 300%.
In terms of specific breakdowns, the total debt-to-GDP ratio of China’s households, nonfinancial firms and governments amounted to 77.5%, 128.5%, and 45.8%, respectively. Among these sectors, the nonfinancial companies’ debt growth rate was particularly notable at 8.5%.
Household and government debt growth rates stood at 7.6% and 6.4%, respectively.
In addition, China’s external debt was estimated to be $1.8 trillion in 2020, up from $1.67 trillion the year before. This accounts for 24.7% of the total debt. It should be noted that international debt as a proportion of total debt remains relatively low in comparison to debt owed by some of China’s peers.
When it comes to debt structure, the majority of China’s debt is in the form of corporate bonds. Bond issuance accounted for over 28.3% of the total debt, followed by bank loans at 27.6%. Corporate bonds are a common form of debt instrument used by Chinese companies to raise funds.
Overall, it can be said that China is indeed in debt. But its debt situation is well-managed, with the government taking relevant measures to reduce the debt burden and rein in its rapid growth.
Which countries have fallen into China’s debt trap?
China has increased its pattern of loaning large amounts of money to developing countries in order to build infrastructure. But some nations have fallen prey to what has been dubbed a “debt trap.”
Countries that have become ensnared in this trap include Sri Lanka, the Maldives, Tanzania, and Djibouti. All of them incurred large debts along the Belt and Road Initiative (BRI) – although Sri Lanka is the best known example of a country that was entrapped in such a manner.
China lent billions of dollars to Sri Lanka to fund the construction of a deep seaport in the city of Hambantota. But when Sri Lanka was unable to pay off its debt to a Chinese state-owned enterprise, it was forced to hand over a 70-year lease of the port to the Chinese.
This gives them a strategic foothold to project their power in the region.
The Maldives is another country that landed itself in debt due to its involvement with the BRI. China issued loans that the small island nation could not pay off. As repayment, it got permission for a foreign military base in the country, which has already been used to poach fish and carry out aerial patrols.
Similarly, Tanzania pledged itself for further debt when it decided to fund a new deep seaport through foreign loans. 95 percent of the cost of this project was footed by China. The government also promised to hand over special zones in the island of Bagamoyo to the Chinese authorities.
Finally, Djibouti got into debt due to its leasing of the Doraleh multi-purpose port to a Chinese state-owned firm. As part of the repayment procedure, it transferred over a quarter of the national debt to China.
The ‘debt trap’ has become an area of concern as a number of other countries, such as Pakistan, Kyrgyzstan, and Laos, also owe a large amount of money to China. This has led to worries that other countries could soon fall prey to the same situation.