China is no longer the country that holds the highest value of US debt as it sees a gradual withdrawal of investments in US debt.
China’s exposure to US government debt fell below $1 trillion for the first time in 12 years, CNBC reported. The reason for this is the rise in the main interest rates in the US, which makes US bonds a less attractive financial asset.
Continuing a downward trend that began in early 2021, China’s holdings of U.S. Treasuries fell to $980.8 billion, according to data from the U.S. Treasury Department.
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That’s down about $23 billion from April and down nearly $100 billion, or 9%, on a year-over-year basis, which is a significant achievement.
As a result, Japan is currently the largest holder of US debt, holding $1.2 trillion in debt.
A major reason for China’s reduced interest in US debt is the Federal Reserve administration’s policy of raising key interest rates, according to CNBC.
However, the decline is also part of Beijing’s policy to diversify its foreign debt portfolio, according to experts.
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