{"id":2074129,"date":"2023-10-20T12:16:02","date_gmt":"2023-10-20T16:16:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-dumps-us-debt-as-japan-other-countries-bolster-treasury-securities\/"},"modified":"2023-10-20T12:19:45","modified_gmt":"2023-10-20T16:19:45","slug":"china-dumps-us-debt-as-japan-other-countries-bolster-treasury-securities","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-dumps-us-debt-as-japan-other-countries-bolster-treasury-securities\/","title":{"rendered":"China sells off US debt while Japan and other countries increase holdings of Treasury securities."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">30<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fchina-dumps-us-debt-as-japan-other-countries-bolster-treasury-securities%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2074129&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div data-post-content=\"true\" class=\"post_content\" id=\"post_content\">\n<div class=\"my-5\">\n<blockquote>\n<p>In August, foreign holdings \u200cof U.S. \u2062Treasury securities rose for the third \u200bconsecutive month to their highest\u200b level since \u2064December\u2062 2021, according to new <a href=\"https:\/\/ticdata.treasury.gov\/resource-center\/data-chart-center\/tic\/Documents\/slt_table5.html\" target=\"_blank\" rel=\"noopener\">data<\/a> \u200c from the Treasury Department. But China captured the attention as it continued dumping U.S. assets by vast amounts.<\/p>\n<\/blockquote><\/div>\n<p>Total holdings of U.S. debt increased nearly 3 percent year-over-year\u2064 to \u2062$7.707 trillion. \u2062This was \u200balso up from July&#8217;s total of $7.655 trillion.<\/p>\n<p>China reduced its holdings by more \u200bthan $16 billion to $805.4 billion,\u2063 down approximately \u206215 percent from the same time a year\u2062 ago and the \u200clowest since 2009. Chinese investors also offloaded about $5.1 \u200bbillion in U.S. stocks in August, the highest on record.<\/p>\n<div class=\"shortcode\">\n<div class=\"border-comp-divider mb-4 mr-4 w-full max-w-[500px] border px-5 py-4 text-[16px] leading-[20px] text-[#262626] md:float-left\" id=\"in_article_related_stories\">\n<h2 class=\"mb-3 font-sans text-[16px] font-semibold uppercase leading-[19px] text-[#2F2F2F]\">Related Stories<\/h2>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-4 sm:line-clamp-3\">\n            <a href=\"http:\/\/www.theepochtimes.com\/article\/investor-demand-for-us-bonds-weakens-signaling-fear-for-americas-fiscal-health-5511387?ea_src=author_manual&#038;ea_med=related_stories\"><\/p>\n<h3 class=\"text-sm sm:text-base\">Investor Demand for US Bonds Weakens, Signaling Fear for America\u2019s Fiscal Health<\/h3>\n<p>            <\/a>\n          <\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">10\/17\/2023<\/div>\n<\/p><\/div>\n<div class=\"shrink-0 basis-[70px] sm:basis-[120px]\">\n          <a href=\"http:\/\/www.theepochtimes.com\/article\/investor-demand-for-us-bonds-weakens-signaling-fear-for-americas-fiscal-health-5511387?ea_src=author_manual&#038;ea_med=related_stories\">\n            <picture><source type=\"image\/webp\" https:><\/source><source type=\"image\/*\" https:><\/source>\n            <\/picture>\n          <\/a>\n        <\/div>\n<\/p><\/div>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-4 sm:line-clamp-3\">\n            <a href=\"http:\/\/www.theepochtimes.com\/article\/whats-behind-the-latest-bond-rate-increase-5509267?ea_src=author_manual&#038;ea_med=related_stories\"><\/p>\n<h3 class=\"text-sm sm:text-base\">What\u2019s Behind the\u2063 Latest Bond Rate\u200b Increase?<\/h3>\n<p>            <\/a>\n          <\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">10\/13\/2023<\/div>\n<\/p><\/div>\n<div class=\"shrink-0 basis-[70px] sm:basis-[120px]\">\n          <a href=\"http:\/\/www.theepochtimes.com\/article\/whats-behind-the-latest-bond-rate-increase-5509267?ea_src=author_manual&#038;ea_med=related_stories\">\n            <picture><source type=\"image\/webp\" https:><\/source><source type=\"image\/*\" https:><\/source>\n            <\/picture>\n          <\/a>\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>Japan maintained its\u200c status as the world&#8217;s largest foreign holder of Treasurys, with investors in Tokyo raising their stakes by about\u2063 $4 billion to $1.116 trillion.<\/p>\n<div class=\"my-5\">\n<blockquote>\n<h2>&#8216;The Long Goodbye&#8217;<\/h2>\n<p>A chorus of market observers contends that China sold its \u2064U.S. debt and equity holdings to support \u2064the Chinese yuan for\u200d intervention purposes. Beijing officials have \u200b<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-dumps-us-debt-as-japan-other-countries-bolster-treasury-securities\/\" title=\"China sells off US debt while Japan and other countries increase holdings of Treasury securities.\">reportedly pushed state-run banks<\/a> to resuscitate \u2063the yuan. When\u2062 this becomes \u200dthe mandate, China sells dollar-denominated assets and uses the \u200dreturns\u2064 to purchase \u200cthe yuan.<\/p>\n<\/blockquote><\/div>\n<p>This year, the onshore and offshore yuan have\u200d weakened considerably\u200d against the greenback, hitting the lowest level \u2064since late 2007. In 2023, the yuan has been \u2064one of the\u200b worst-performing Asian currencies,\u2063 tumbling around 6 percent.<\/p>\n<div class=\"shortcode post-related-videos\">\n<div class=\"lazyload-wrapper\">\n<div class=\"lazyload-placeholder\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>Other economic experts argue that Beijing is \u200battempting\u2063 to rein in its finances during below-trend\u200c growth. As a result, officials might\u200c be using the government\u2019s resources to prop \u200bup the world\u2019s\u200c second-largest economy.<\/p>\n<p>In the\u200b third quarter, China&#8217;s economy slowed to a 4.9 percent GDP growth rate, \u200cdown from 6.3 percent in the second quarter. This\u2064 was higher than the \u200bconsensus estimates of 4.4 percent.<\/p>\n<p>Diversification is another critical component of China&#8217;s war chest, with U.S. government\u2063 debt representing about one-quarter of its total <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-sanctions-pushed-iran-to-brink-of-bankruptcy\/\" title=\"US Sanctions Pushed Iran to Brink of Bankruptcy\">foreign exchange reserves<\/a>, down from\u2062 59\u2064 percent nearly a decade ago. Beijing has\u2064 been stockpiling a wide range of \u2064assets, from gold to crude oil to euros.<\/p>\n<p>Nevertheless,\u2064 some economists refer\u200b to\u200c China&#8217;s gradual dumping of U.S. assets as &#8220;the long goodbye.&#8221;<\/p>\n<p>&#8220;After \u200cpeaking above\u200c $1.3 trillion in late 2013, China&#8217;s holdings have since \u2064dropped by a \u2063combined $500 billion (or almost\u2063 40%) in the past\u200b 10 years\u200b to just a bit above $800 billion now,&#8221; wrote Douglas Porter, \u200dthe chief economist at\u200d BM Capital Markets, \u2063in a note. &#8220;The reductions have clearly \u200dgathered steam in the past two years, likely aggravating the Treasury sell-off.&#8221;<\/p>\n<div class=\"my-5\">\n<blockquote>\n<h2>Disinterest in US Debt<\/h2>\n<p>In recent weeks, Treasury auctions have\u200c seen\u2063 <a href=\"https:\/\/www.theepochtimes.com\/article\/investor-demand-for-us-bonds-weakens-signaling-fear-for-americas-fiscal-health-5511387\" target=\"_blank\" rel=\"noopener\">diminishing investor demand<\/a>, including\u2063 for 3-, 10-, and \u200c30-year\u200b bonds. The subdued \u2063interest \u200dhas resulted from the \u200cfederal government flooding \u2064capital markets with bonds and widespread concerns about Washington\u2019s fiscal path\u2064 that many, like Federal Reserve Chair\u2064 Jerome Powell, contend is unsustainable.<\/p>\n<\/blockquote><\/div>\n<p>The Treasury issued\u2064 $1 trillion in bonds in the third quarter and\u2062 is forecast to flood the market with another \u200c$850 billion. Meanwhile, the national debt has topped\u2063 $33.55 trillion, and the federal deficit is\u2062 close\u200c to \u2063$2 \u2064trillion.<\/p>\n<p>That said, there was \u200bsome good news in the bond market as the Oct. 18 $13 billion 20-year Treasury auction highlighted \u2063robust and better-than-expected demand.\u200b This offered\u2062 a reprieve in the selloff of longer-term Treasury \u200csecurities.<\/p>\n<p>The benchmark 10-year yield crossed\u2063 the crucial 5 percent mark on Oct. \u206419 for the first \u200ctime since July 2007.\u2062 It pared those \u200bgains and retreated below 5 percent again,\u200d but the yield has rallied by roughly 40 basis points so far this month.<\/p>\n<div class=\"my-5\">\n<blockquote>\n<p>Investors took their cues from Fed Chair Jerome \u2064Powell, <a href=\"https:\/\/www.theepochtimes.com\/article\/fed-chair-powell-hints-no-rate-hike-in-november-leaves-door-open-to-tighter-policy-5513521\" target=\"_blank\" rel=\"noopener\">telling<\/a> the Economic Club of New York that\u2064 monetary policy was not \u200dtoo restrictive.<\/p>\n<\/blockquote><\/div>\n<p>&#8220;Does\u200b it feel like policy is too tight right now? I would have to say no,&#8221; Mr. Powell said.<\/p>\n<div class=\"post-figure\" style=\"margin-left:0;margin-right:0;max-width:1200px\">\n<figure style=\"width:640px;margin-left:auto;margin-right:auto\" class=\"alignnone\"><figcaption>Federal Reserve Board Chairman Jerome Powell speaks during a news conference following\u200d the \u2062Federal Open\u200d Market \u2062Committee meeting at the Federal Reserve in Washington on June 14, 2023.\u200b (Mandel Ngan\/AFP via Getty Images)<\/figcaption><\/figure>\n<\/p><\/div>\n<p>While he signaled that the central bank might be done raising interest rates, Mr. \u2063Powell left the\u200d door open for\u200d additional tightening\u200d if growth and inflation fail to moderate.<\/p>\n<p>\u201cStill, the record suggests that a sustainable return to \u200dour 2 percent inflation \u2064goal\u2062 is likely to require a period\u200c of below-trend \u2063growth\u200d and \u200csome further softening in \u200dlabor market conditions,\u201d he said.<\/p>\n<p>The Fed has shown no indication\u200b that it will resurrect its immense bond-buying\u2062 program.<\/p>\n<div class=\"my-5\">\n<blockquote>\n<p>The central bank \u2064is\u2063 in the middle of <a href=\"https:\/\/fred.stlouisfed.org\/series\/WALCL\" target=\"_blank\" rel=\"noopener\">reducing its balance sheet<\/a>, which climbed to an all-time high of $8.9 trillion during the coronavirus pandemic. Officials are unclear when the Fed could return the balance sheet to pre-pandemic levels, but \u200dthey have\u2063 offloaded\u200b $1 trillion in the last year. As a result, some believe\u200c that it is unlikely the institution could start scooping up \u2064Treasury securities again.<\/p>\n<\/blockquote><\/div>\n<\/div>\n<p> <\/p>\n<h2> What are the potential implications of China&#8217;s \u2063significant reduction in \u200cits holdings of U.S. Treasury securities?<\/h2>\n<p><span>  \u2063 Ith its holdings increasing by $12.8 billion\u200b to \u2064$1.339 trillion. Japan has held the top position \u200bsince October 2018.<\/p>\n<p>The increase\u2062 in foreign holdings \u200dof U.S. Treasury securities \u200bis an important indicator of\u200d investor confidence in the stability\u200c and attractiveness of U.S. government \u2062debt. It suggests that despite ongoing economic uncertainties and geopolitical\u2062 tensions, foreign investors still view U.S. Treasury securities as a safe and reliable \u200cinvestment.<\/p>\n<p>However,\u200b the significant reduction in China&#8217;s holdings raises concerns about the implications \u2064for \u200cthe U.S. economy and financial \u200bmarkets. China has been the largest foreign holder \u2063of U.S. Treasurys in the past, and \u200bits decision to dump U.S. assets by such large amounts\u200d indicates a lack of confidence in the \u200dU.S. \u200deconomy\u200d and its fiscal health.<\/p>\n<p>China&#8217;s actions align with its broader efforts to reduce its exposure to U.S. assets and\u200b diversify its foreign exchange reserves. The country has been \u2062actively promoting \u2063the use of its own currency,\u2063 the yuan, in international transactions \u2064and has been investing in other currencies and assets, such as gold and commodities.<\/p>\n<p>The decrease \u2064in China&#8217;s holdings of U.S. Treasurys could have several implications. First,\u2064 it could <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/the-romney-cotton-minimum-wage-plan-is-anti-conservative-and-embraces-the-logic-of-the-left\/\" title=\"The Romney\/Cotton Minimum Wage Plan Is Anti-Conservative And Embraces The Logic Of The Left\">put upward pressure<\/a> on U.S. interest rates, as the reduced demand for U.S. government debt \u200dmay require\u2063 higher\u200c yields \u2063to attract other investors. This could increase borrowing costs for the U.S. government and result in higher mortgage rates for American consumers.<\/p>\n<p>Second, it could impact the U.S.\u200c dollar&#8217;s \u200bstrength, as China&#8217;s reduced demand for U.S. assets could weaken the currency&#8217;s\u2063 value. A weaker dollar \u2063could have implications for international trade and could potentially impact the competitiveness of U.S. exports.<\/p>\n<p>Finally, the\u200c decrease in China&#8217;s holdings highlights the ongoing economic and geopolitical tensions between the\u200d two countries. The U.S. and China have been engaged \u200cin a trade \u2062war for several years, with both countries imposing tariffs on each other&#8217;s\u2064 goods. \u2063The \u200dreduction in China&#8217;s\u2062 holdings of U.S. Treasurys could be seen as a further escalation of this conflict.<\/p>\n<p>It will be important \u2062to monitor the trends in foreign holdings of U.S. Treasury securities \u200din the coming months. If other countries follow China&#8217;s lead and reduce their exposure \u200cto U.S. assets, it could have significant implications for the U.S. economy and financial markets. \u200bIt may also \u2064prompt the \u2062U.S. government to reassess its fiscal policies \u2064and the \u200bsustainability of its \u2062debt\u200c levels.<\/p>\n<p>In conclusion, while foreign holdings of U.S. Treasury securities \u200bincreased in August, China&#8217;s\u2062 significant reduction in its holdings is cause for concern. The reduction reflects China&#8217;s efforts to diversify its foreign exchange reserves and reduce its exposure \u200dto U.S. assets. The implications of China&#8217;s actions \u2062on U.S. interest rates, the value of the dollar,\u2063 and the ongoing tensions between the two countries warrant \u200cclose \u200dattention.\u200b Monitoring foreign holdings of\u200d U<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In August, foreign ownership of U.S. Treasury securities reached its highest level since December 2021, marking the third consecutive monthly increase, per Treasury Department data. However, China stood out as it continued to sell off significant amounts of U.S. assets. Overall, U.S. debt holdings rose by almost 3 percent YoY, reaching $7.707 trillion.<\/p>\n","protected":false},"author":278,"featured_media":2074130,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2074129","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2074129","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/278"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2074129"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2074129\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2074130"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2074129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2074129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2074129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}