Saturday, June 4, 2011
China has dropped 97 percent of its holdings in US Treasury bills, decreasing its ownership of the short-term US government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the US Treasury.
Treasury bills are securities that mature in one year or less that are sold by the US Treasury Department to fund the nation’s debt.
Mainland Chinese holdings of US Treasury bills are reported in column 9 of the Treasury report seen HERE.
Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term US Treasury securities. Prior to the fall of 2008, acccording to Treasury Department data, Chinese ownership of short-term Treasury bills was modest, standing at only $19.8 billion in August of that year.
But when President George W. Bush signed legislation to authorize a $700-billion bailout of the U.S. financial industry in October 2008 and President Barack Obama signed a $787-billion economic stimulus law in February 2009, Chinese ownership of short-term U.S. Treasury bills skyrocketed.
By December 2008, China owned $165.2 billion in US Treasury bills, according to the Treasury Department. By March 2009, Chinese Treasury bill holdings were at $191.1 billion. By May 2009, Chinese holdings of Treasury bills were peaking at $210.4 billion.
At the end of March 2011, by which time the Chinese had dropped their Treasury bill holdings 97 percent from their peak, the publicly marketable segment of the U.S. national debt had almost doubled from August 2008, hitting $9.11 trillion. Of that $9.11 trillion, $5.8 trillion was in intermediate-term Treasury notes, $1.7 trillion was in short-term Treasury bills; $931.5 billion was in long-term Treasury bonds, and $640.7 billion was in TIPS.
Before the end of March 2012, the US Treasury must repay all of the $1.7 trillion in Treasury bills that were sold as of March 2011 or find new or old buyers who will continue to invest in US debt. But, for now, the Chinese no longer appear to be bullish on the US.