China reduces its holdings of U.S. debt for three consecutive months
According to the monthly International Capital Flow Report (TIC) issued by the U.S. Treasury Department on July 16, local time, China’s U.S. debt holdings decreased by US$17.7 billion in May 2021 compared to April. To $1.078 trillion.
This is the third consecutive month that China has reduced its holdings of US debt, but China is still the second largest overseas holder of US debt.
Japan continued to be the largest overseas holder of U.S. Treasury bonds in May this year, but its U.S. Treasury holdings fell by US$10.6 billion from the previous month, returning to the decline since the beginning of the year, and the total holdings fell to US$1.266 trillion.
This is also the eighth time Japan has reduced its holdings of U.S. debt in the last ten months.
Historical data shows that starting from June 2019, Japan's U.S. bond holdings have surpassed China for the first time since May 2017, and have been promoted to the first place.
In July last year, Japan’s total holdings of US$1.29 trillion in US debt hit a record high.
Since then, Japan has begun to reduce its holdings of US debt.
Although open interest has decreased in recent months, overall, the total amount of US debt held by Japan and China still exceeds the combined holdings of the third to fifth "creditors" of the United Kingdom, Ireland, and Luxembourg.
Among the top 10 creditors of U.S. debt, half of them sold U.S. debt, and half chose to increase their holdings.
Among them, the United Kingdom increased its holdings of nearly US$36 billion in US debt in May this year; the Cayman Islands, which represents the interest of hedge funds, increased its holdings of US$2.7 billion in US debt, rising for two consecutive months.
Following the "clearing" of 95% of US debt, in May of this year, Russia again sold US$150 million in US debt, leaving only US$3.8 billion in the final position.
In 2018, Russia also held US$96 billion in US debt. Since then, Russia has sold US debt on a large scale.
The report also shows that the total amount of US government debt held overseas increased by US$64.7 billion from the previous month to a total of US$7.135 trillion, which is the highest level since February 2020.
The IMF's recent global international reserves data show that as of May 2021, the share of the US dollar in foreign reserves has unexpectedly dropped to the lowest rate of 59.54% in 25 years. In 1999, the share was as high as 73%.
The Bank for International Settlements stated in the latest industry report that the current US dollar-led international settlement system no longer meets the new requirements of international commerce.
At the same time, the new crown virus has prompted countries to accelerate the adoption of digital payments and encrypted currencies.
The European Union, Russia and emerging market countries are also jointly reassessing the strategic value of gold and their own digital currencies.