Business

China's US debt holdings jump 30% easing financing fear

Chinese Yuan and US Dollar notes
Image caption The US dollar has weakened against the Yuan making assets more affordable to Chinese investors

The US owes more money to China than it had previously estimated, government figures show.

According to the Treasury Department's revised figures, Beijing's total holding of US debt was $1.16 trillion (£712bn) in December, up $268bn from an initial estimate two weeks ago.

China is the largest foreign holder of US securities.

Analysts said the figures may help ease fears about the ability of the US to finance its debt.

Offshore investment

The Treasury Department said it made the changes to its initial estimates after receiving more accurate data.

In its initial estimates, all purchases made out of a particular country were attributed to that nation, irrespective of where the buyers came from.

However, the revised data takes into account the origin of the buyers, as opposed to the location where the purchases were made.

The latest data showed that a lot of Chinese investors were routing their purchases through the UK, a trend that analysts had previously thought was happening but had difficulty confirming.

"This provides the most substantive evidence to what has been previously suspected...that China has been increasingly transacting through the UK," said Alan Ruskin of Deutsche Bank.

"It does suggest that there's more commitment on the part of China to finance the US current account deficit."

However, he added that "on the downside is the perception that the US is more beholden to the Chinese".

The UK cut its Treasury holdings figures by $269bn in December, in line with the US findings.

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