The latest data shows that, in the scramble to buy US treasuries in recent months as the global markets imploded, the Chinese are the “winners”. The Treasury Department’s estimates for September show that China’s Treasury securities holdings increased to almost $600 Billion, placing it ahead of Japan as the single largest holder of Uncle Sam’s IOUs. Japanese holdings actually decreased by $13 Billion for the month as the Yen rallied against all major currencies.
A quick look at the charts below gives you a good understanding of the foreign policy component of the economic jigsaw puzzle that president elect Obama and his team will inherit. With China increasingly funding the US deficit the relationship between Washington and Beijing will become increasingly complex.