China Sells $458.4B in US Debt

According to the real-time data from the U.S. National Debt Clock, as of now, the scale of U.S. debt has reached $31.62 trillion.

As early as January of this year, the U.S. debt had already hit the statutory limit of $31.4 trillion.

"Once a debt default occurs, it will trigger a financial disaster in the United States," this is the strongest voice that U.S. Treasury Secretary Yellen has issued so far this year.

Yellen said that all of these have only one purpose: to raise the debt ceiling.

Yellen has called on Congress to raise the debt ceiling more than once, with increasingly strong language.

The U.S. Congressional Budget Office (CBO) has also issued a warning: if the debt ceiling is not changed, a debt default will occur between July and September this year.

According to records, the U.S. debt ceiling has been raised more than 100 times in total, with the most recent increase in December 2021, which raised the debt ceiling by $2.5 trillion at one time.

However, it reached the debt ceiling again in January of this year.

Why is the U.S. Congress reluctant to raise the debt ceiling this time?

In short: the scale of U.S. debt is too large.

Due to the previous "debt ceiling" being virtually non-existent, the debt snowball has grown larger and larger, and now it is almost out of control.

It should be noted that the U.S. fiscal deficit last year was as high as $1.3 trillion, and it still has to repay $1 trillion in interest on national debt every year.

It is conceivable how much pressure this is, facing a dilemma, continue to borrow money, which may trigger a debt collapse, do not borrow money, can only lie flat.

The current situation of U.S. debt has a great impact on investor confidence.

In the past 2022, China and Japan, as the two major overseas "debt owners" of U.S. debt, have successively reduced their holdings of U.S. debt, each selling $100 billion worth of U.S. debt last year.

On March 16, the U.S. Treasury Department released the capital flow report for January this year, with foreign investors holding $7.4 trillion in U.S. debt, down $250 billion compared with the same period last year.

As the largest "debt owner" of U.S. debt, Japan sold a large amount of U.S. debt last year, and has been reducing its holdings for most of the time.

However, it has started to buy U.S. debt again this year, increasing its holdings by $28.1 billion in January.

However, as the second largest "debt owner" of U.S. debt, China continued to reduce its holdings of U.S. debt in January this year, reducing its holdings by $7.7 billion, with the position falling to $859.4 billion.

This is the sixth consecutive month that China has reduced its holdings of U.S. debt.

Over the past few years, China has been reducing its holdings of U.S. debt.

In 2013, China held $1.3 trillion in U.S. debt, reaching the highest in history.

Since then, China has continued to reduce its holdings of U.S. debt.

As of January 2023, China has sold a total of $458.4 billion in U.S. debt, and the pace of selling has gradually increased in recent years.

It is worth noting that Saudi Arabia reduced its holdings by $8.7 billion in January, with its position falling to the lowest level in six years.

In addition, major countries holding U.S. debt such as Belgium and Ireland have all made moves to reduce their holdings of U.S. debt.

Recently, the United States has seen a major event of several bank bankruptcies.

The six major U.S. banks personally came forward to "transfuse blood" for First Republic Bank, injecting $30 billion.

It is not difficult to see that the United States is on the verge of a financial crisis, and any carelessness may trigger a global financial tsunami.

It can be determined that the United States will raise the debt ceiling again.

After all, if you want the game of "borrowing new to repay old" of U.S. debt to continue, you can only continue to raise the debt ceiling, and there is no other way.

However, the current situation faced by the United States is far from completely solved by raising the debt ceiling.

This approach can only delay the occurrence of debt default.

If the limit is raised and there is still no restraint, it will accelerate the outbreak of the U.S. financial disaster.