How much US debt does China own?

China owns $1 trillion in US debt as of May 2022. It’s interesting that China holds a sizable amount of US debt but this is perhaps not surprising given the nation’s unprecedented economic growth over the previous few decades. Still, China hasn’t passed Japan yet, which is the number one country in the world by foreign holdings of US debt with $1.3 trillion in USD currency.

US debt in October 2022

An important economic metric is the national debt to GDP ratio. Increases in debt as a percentage of GDP have a tendency to impede economic growth.

To fill the gap between tax revenue and spending on items like defense and social services, the federal government of the United States issues debt in the form of Treasury securities. On October 8, 2022, the total national debt was $31.1 trillion.

Private and public debt together make up the United States’ total national debt. Federal departments and agencies in the United States own intragovernmental debt, which is practically domestic debt.

20% of all outstanding US debt is presently held by foreign investors. This includes any National Insurance, Medicaid, or any pension or retirement plan payments that are overdue.

After the vast majority of the public debt has been acquired by foreign governments, the remaining public debt is owned by US banks and private investors, the Treasury Department, state and municipal governments, investment companies, pension plans, insurance companies, and owners of investment instruments.

Why USA has low foreign reserves?

The reason behind the fall of the American Forex is less to do with intervention and more to do with appreciating Dollar. We find that the negative correlation between rising Fed Fund Rate and Fed Foreign Reserves is almost (-) 60%. This means that the USA does not really need to hold much of any other currency, aside from its own.

How’s the US Debt Compared to Other Countries?

The national debt of the United States is huge compared to other countries, because it’s at $31.1 trillions (USD) and the next highest in debt is Japan at $9.45 trillions (USD) which is quite a gap. Next is Italy and Spain with $2.6 trillions (USD) and $1.3 trillions (USD) respectively.

But another way to measure it is using the debt-to-GDP ratio, which makes the US just a slightly above average country with a little over 100% debt-to-GDP ratio, much lower than Japan’s 240% ratio, or Greece’s 170% ratio.

Who America owes?

America owes to China and Japan as we discussed in the beginning of this article, not in that particular order. America also owes to the UK (650 billion USD), to Ireland (335 billion USD) and to Luxembourg (330 billion USD). Other countries own US debt but these are the most prominent.

Can the US get rid of debt?

The debt of a country is different than the debt of an individual and it’s not necessary to get rid of the debt completely. But it’s true that the US could use some debt relief at this point. Unfortunately the economic background is not favorable and the authorities are currently using only band-aid measures such as increasing interest rates to lower inflation.

However, this isn’t enough for a healthy economy and it may come with future backlash. So we better buckle up and get ready for a bumpy ride, while we look for side hustles and additional sources of income such as trading forex.

Leave a Comment

Your email address will not be published. Required fields are marked *