Japan on course to replace China as top US creditor
Beijing records 0.15pc gain in US treasury holdings while Tokyo shows 6pc increase
China is poised to lose its place as the United States' biggest creditor for the first time since the height of the financial crisis, blunting one of Mitt Romney's favoured attacks in the presidential campaign.
Chinese holdings of treasuries rose 0.15 per cent this year to US$1.15 trillion at the end of August, the latest government data shows.
Japan raised its stake by 6 per cent to US$1.12 trillion, on pace to top the list of foreign creditors by next month.
While Romney promises to label China a currency manipulator if he wins the election and says US President Barack Obama has been too lenient in trade disputes, foreign demand is a reason Treasury yields remain close to record lows, reducing the cost of credit for the government, companies and individuals.
"We would still have a great need for overseas money," said Dominic Konstam, the head of interest-rate strategy at Deutsche Bank, one of the 21 primary dealers that trade with the Federal Reserve.
"Whatever deficit we're running, we're going to supply a lot of treasuries and someone's going to buy them, and if it's not China, it will be someone else."