China Sells Off $491 Billion Worth of US Treasuries in 10 Years
Over the last ten years, China has steadily been offloading hundreds of billions of US government-backed securities. The U.S. Treasury Department has reported that China now holds the lowest amount of Treasury securities in more than 14 years.
In May 2013, China reached an all-time high of $1.297 trillion in Treasury securities. However, since then, the country has been gradually reducing its holdings, bringing it down to $805.4 billion as of August 2023 – a substantial decrease of over $491 billion.
This divestment coincides with Moody’s lowering of its outlook on the United States’ credit rating, citing the nation’s weakening financial position and political infighting in Washington. Moody’s expects the US’ fiscal deficits to remain large without effective fiscal policy measures, significantly weakening debt affordability.
This downgrade does not necessarily mean a cut in the country’s credit ratings, but the chances of that happening in the future have increased.
Hot Take
China’s drastic reduction of US Treasuries over the past decade, coupled with Moody’s downgrade of the outlook on the United States’ credit rating, signifies a significant shift in the global economy and international politics. As two superpowers navigate an uncertain financial landscape, the repercussions of these decisions will undoubtedly have a lasting impact on the geopolitical and economic power dynamics around the world.
By
By
By
By
By