China has long bought piles of our debt but it’s been seeking to reduce its exposure for a long time. However, if it exits too quickly it will likely hurt itself more than it will hurt the USA.
The brewing (or perhaps now declared) trade war driven by the political classes in both the US and China is the reason given for China’s move, but this has been coming for a while and there is likely more debt to be unloaded soon. The Ultimate Crony Capitalist State is on the move but it looks like its hand is being forced. This is interesting from a gameplay perspective.
China’s ownership of U.S. bonds, bills and notes slipped to $1.17 trillion, the lowest level since January and down from $1.18 trillion in June, according to data released by the Treasury Department on Tuesday. Japan, the largest foreign investor in Treasuries after China, increased its holdings, as did Saudi Arabia, Taiwan, Singapore and France.