Chinese ownership of U.S. debt has increased to just over $1.2 trillion, allowing China to maintain its position as the largest foreign holder of federal debt, according to a new report.
China owned 20 percent of all foreign holdings in federal debt as of last December, according to a report from the Congressional Research Service published this week. Chinese ownership of U.S. debt increased by $94 billion in the four years since December 2011, when China owned 23 percent of all foreign holdings in federal debt.
The report comes as tensions between the United States and China have escalated over Chinese territorial claims in the South China Sea. On Thursday, China’s defense ministry warned the U.S. Navy to “be careful” in the South China Sea. American warships have repeatedly sailed near disputed islands in the region in recent months as part of “freedom of navigation” exercises.
The Pentagon sent a carrier strike group to the South China Sea at the start of this month after reports that China had deployed a surface-to-air-missile system to a disputed island in the region. The Philippines also recently agreed to give the U.S. military access to five bases, some of which are close to the disputed South China Sea, a deal which China’s defense ministry rejected as “a reflection of a Cold War mentality.”
President Obama is due to meet with Chinese President Xi Jinping Thursday in Washington, which will take place as leaders from Asian countries are in town for a summit on nuclear security.
Japan followed China as the second major holder of U.S. debt according to data from last December, owning just over $1.1 trillion, which accounted for 18 percent of all foreign holdings in federal debt. Caribbean Banking Centers followed far behind in third with $351.7 billion in federal debt.
Approximately two-thirds of foreign holdings in U.S. debt are held by government sources while the rest is held by private investors.
Foreign holdings of federal debt increased between December 2011 and December 2015, rising by $1.1 trillion to more than $6.1 trillion, according to the report. The total publicly-held debt increased by about $3.5 trillion to more than $15.1 trillion during the same four-year period.
In December 2015, foreigners held 40 percent of publicly held debt, which is on par with previous years.