China’s holdings of U.S. Treasury bonds in September hit their lowest in a year, but the country remained the largest foreign buyer of U.S. government debt, statistics released by the U.S. Department of the Treasury on November 16 showed.
China’s holdings of U.S. Treasuries totaled $1.151 trillion in September, down by $13.7 billion from the previous month.
The statistics also showed that Japan, the second largest foreign buyer, was a net seller of U.S. Treasuries in September too, with its holdings slipping from $1.03 trillion to a one-year low of $1.028 trillion.
The data represented the aggregation of purchases and sales by both foreign official institutions and private investors. Together, U.S. Treasuries saw a net foreign outflow of $29.1 billion in September.
Of that, net foreign private inflows were $23.5 billion and net foreign official outflows were $52.7 billion, meaning that the foreign private sector remained a net buyer, while foreign official institutions contributed more to the selling activity.
Washington has increased the issuance of its government bonds since the massive corporate tax cut was enacted last December. Business insiders have warned of imbalance between demand and supply.
“I think we have a supplydemand problem for bonds that will particularly come next year or the year after,” said Ray Dalio, founder of the world’s largest hedge fund company Bridgewater Associates.
“In other words, because of that tax cut and the deficit, we’ll have