Question about debt with China.

[Baitball Blogger]

Exactly who has been building up that debt with China? Is it private sector or public sector?

I have to believe it was private sector.

If it's public sector, would raising taxes on the rich helped reduced the dependence on borrowing from China?

[FBaggins]

1. Both

The total amount of public debt is not connected to who owns that debt. China owns much of it because Americans by far more stuff from China than the Chinese but from us. If they aren’t buying “stuff” from us… then they have to do something with all those dollars.

[Klaralven]

9. China's overall trade is pretty much in balance

They use the dollar trade surplus with the US to buy food and raw materials, e.g. iron ore from Brazil, cobalt from Congo, etc.

Since the dollar is an international trade currency, it is easy for them to use the surplus this way. China's holdings of US treasuries have been stable for the last 10 years.

Between the Asian Financial Crisis and 2010, a number of countries built up US dollar reserves to protect themselves.

Many nations learned from this, and quickly built up foreign exchange reserves as a hedge against attacks, including Japan, China, South Korea. Pan Asian currency swaps were introduced in the event of another crisis. However, nations such as Brazil, Russia, and India as well as most of East Asia began copying the Japanese model of weakening their currencies, and restructuring their economies so as to create a current account surplus to build large foreign currency reserves. This has led to ever-increasing funding for U.S. treasury bonds, allowing or aiding housing (in 2001–2005) and stock asset bubbles (in 1996–2000) to develop in the United States.

https://en.wikipedia.org/wiki/1997_Asian_financial_crisis#Asia

[Tomconroy]

2. They used to buy a lot of US bonds.

Assume they still do

[paleotn]

3. Yes. But....

that dependency isn't in itself a bad thing, though I wish we were sitting on a lot more Chinese Yuan, not knowing what to do with it all. Two things in my mind have limited hot wars regionally and globally in the last 50+ years...nuclear weapons and economic interdependency. Nation states don't tend to blow up their customers or suppliers. Usually, anyway.

[Irish_Dem]

4. China won't blow us up. China will own us.

And box us in.

[paleotn]

5. Like Japan I suppose. Didn't happen.

I remember the late 80's early 90's very well.

[Irish_Dem]

6. China will most certainly be a 21st century superpower.

It will happen quite soon.

Japan and China are vastly different on many levels.

The US is in denial about what is going to happen.

[former9thward]

7. Public Sector

The Five countries that own the most U.S. debt are 1) Japan, 2) China, 3) UK, 4) Ireland and 5) Luxembourg. China owns just over one trillion of our Treasuries (as of a couple years ago).

https://www.investopedia.com/articles/markets-economy/090616/5-countries-own-most-us-debt.asp

[roamer65]

8. The Federal Reserve would monetize any Chinese owned US debt.

They would simply buy it off the world markets if the Chinese decide to dump it.

[Elliot Waves]

10. A trillion dollars

Just to put into perspective how much one trillion dollars is.

If you spend $1Million every single day starting on day one of our calendar (the day Christ is suppose to have been born), all the way to today. You will still need to continue spending $1Million dollars every day for more than seven hundred more years before you will have spent $1Trillion.

How much is our debt again? Just some food for thought...