Japan passes China as biggest US creditor for first time since 2008, as Beijing offloads debt

Japan has overtaken China as the top foreign holder of US Treasury securities, a position Japan last held in August 2008.

In its monthly report on bond holdings, the Treasury Department said Wednesday total foreign holdings of Treasury debt dipped 0.9 percent in February to US$6.16 trillion (HK$48 trillion), down from a record of $6.22 trillion in January.

The holdings of China, normally the top holder of Treasury debt, slipped 1.2 percent to US$1.22 trillion. Japan’s fell 1.1 percent from January. China’s decline was a bit larger, allowing Japan to jump into the top spot, US$700 million above China.

China overtook Japan for the top spot in ownership of US Treasury debt in 2008 as the financial crisis and a deep recession pushed up US government borrowing to finance government deficits. The US deficit topped US$1 trillion annually for four consecutive years.

Private analysts had been forecasting that Japan would surpass China’s holdings of Treasury debt this year given current economic trends in both nations.

China’s economy has been slowing and growth of its exports has been tapering, giving the country less to invest overseas. It has also been seeking to diversify those investments, leaving less to invest in US government bonds.